doc no. : pd/dpr/13-14/84 date : 29 october, 2013 date : 9...

Doc No. : PD/DPR/13-14/84

Date : 29th

October, 2013

Assign No. : S0/13-14/03729

Date : 9th

October, 2013

DETAILED PROJECT REPORT (DPR)

ON

INTEGRATED SUGAR (5000 TCD), COGEN POWER (30 MW)

& ETHANOL PLANT (60 KLPD)

AT Kapshi, Tehsil Phaltan,

District - Satara, Maharashtra

Prepared for

M/s Lokmanya Sakhar Udyog Ltd. Kapshi, Tehsil Phaltan,

Dist. Satara

Prepared by

MITCON Consultancy & Engineering Services Ltd. (MITCON) Kubera Chambers, 1

st Floor,

Shivajinagar, Pune – 411 005

November, 2014


ON

INTEGRATED SUGAR, ETHANOL & COGEN POWER PLANT

TABLE OF CONTENTS

Chapter

No.

Title Page No.

EXECUTIVE SUMMARY I – VII

1. INTRODUCTION 1 – 18

1.1 Project Background 1

1.2 Promoter Background & Experience 1

1.3 Sugar Industry Overview, India & Maharashtra 3

1.4 Power Sector Overview 9

1.5 Ethanol Sector Overview 14

1.6 Objectives of the Report 18

1.7 Methodology 18

2. CANE & BIO-MASS POTENTIAL IN THE COMMAND

AREA, A REVIEW

19 – 26

2.1 Sugarcane Potential in Command Area 19

2.2 Surplus Biomass Availability 22

3. PROJECT CONCEPT, DESIGN & KEY PARAMETERS 27 – 43

3.1 Sugar Plant 27

3.2 Cogen Power Plant 29

3.3 Ethanol Plant 35

3.4 Project Site, Key Features 37

3.5 Effluent Treatment 38

3.6 Raw Materials 40

3.7 Utilities & Consumables 41

3.8 Manpower 42

3.9 Implementation Schedule 42

4. TECHNICAL SPECIFICATIONS 44

4.1 Plant Details and Specifications 44

4.2 Cogen Power Plant 44

4.3 Ethanol Plant 44

5. PLANT LAYOUT 45 - 49

5.1 Layout Considerations 45

5.2 Plant Layout 47

5.3 Approach & Internal Roads 49

6. ENVIRONMENT & SOCIO-ECONOMIC BENEFITS 50


ON


TABLE OF CONTENTS (CONTD…)

Chapter

No.

Title Page No.

7. PROJECT PREPAREDNESS 51-52

7.1 NoC’s / Approvals / Permissions 51

7.2 Management & Administration 52

7.3 Technical & Financial Tie Ups 52

7.4 Project Management 52

8. ESTIMATED CAPITAL EXPENDITURE 53- 57

8.1 Land & Site Development 53

8.2 Civil Works 53

8.3 Plant & Machinery Equipment 55

8.4 Miscellaneous Fixed Assets 56

8.5 Preliminary & Pre-operative Expenses 56

8.6 Contingencies 57

8.7 Stocking Levels & Working Capital Requirement 57

9. FINANCIAL VIABILITY 58 – 63

9.1 Basis & Assumptions 58

9.2 Cost Summary 62

9.3 Means of Finance 62

9.4 Financial Viability Indicators 62

10. CONCLUSIONS & RECOMMENDATIONS 64-67

10.1 Project SWOT Analysis 64

10.2 Risk & Mitigates 66

10.3 Key Management Features 67

10.4 Conclusions & Recommendations 67

LIST OF SCHEDULES

Schedule

No.

Title

A Cost of Project & Means of Finance

B Estimated Cost of Production & Profitability Statement

C Debt Service Coverage Ratio

D Cash Flow Statement

E Balance Sheets Forecast

F Analytical & Comparative Ratios

G Payback Period

H Internal Rate of Return

LIST OF ANNEXURES

Annexure

No.

Title

1 Particulars of Land and Site Development Costs

2 Particulars of Buildings and Civil Works

3 Details of Indigenous Machinery

4. Miscellaneous Fixed Assets

5 Preliminary and Preoperative Expenses

6 Estimates of Contingency Escalation Provision

7 Working Capital Requirements

8 Estimated Annual Production & Sales Value

9 Particulars of Indigenous Raw Materials

10 Particulars of Consumables & Packing Materials

11 Particulars of Utilities

12 Requirement of Direct Labor & Calculation of Wages

13 Particulars of Repair and Maintenance

14 Particulars of Other Manufacturing Expenses

15 Requirement of Administrative Overheads

16 Particulars of Selling & Distribution Overheads

17 Repayment of Term loans & Calculation of Interest

18 Calculation of Depreciation

19 Provisions for Taxation & Dividend (Income tax working)


ON


LIST OF APPENDICES

Appendix

No.

Title

I Certificate of Incorporation & Business Commencement Certificate

II Memorandum of Association & Articles of Association.

III Industrial Entrepreneurs Memorandum (IEM) licenses for Sugar, Cogen &

Ethanol

IV Aerial Distance Certificate from Survey of India

V NOC from GramPanchayat

VI Bio-Data of Promoters along with list of Directors

VII HBDs for Cogen Power Plant, Season & Off-season Operations

VIII Steam, Water / Condensate, Fuel & Power Balances

IX Site Location Map

X Implementation Schedule

XI Manpower Chart

XII SLD for Electrical Evacuation / Distribution

XIII Plant Layout

XIV Technical Specifications

DPR on Integrated Sugar, Ethanol & Cogen Power Plant at Kapshi, Dist. Satara

I

Executive Summary

Project at a Glance

Lokmanya Sakhar Udyog Ltd. (LSUL) is registered in the State of Maharashtra under the

Companies Act, 1956 on 21st February, 2011 vide registration No

U15430PN2011PLC38601.

Now, LSUL proposes to set up integrated 5000 TCD sugar plant along with eco-friendly

30 MW capacity cogen power project for decentralized generation of exportable surplus

power, mainly from renewable sources of fuel and 60 KLPD ethanol plant, to be located

at Kapshi, Tehsil Phaltan, Dist. Satara of Maharashtra.

The integrated project comprises of a sugar mill for the manufacture of high quality

sugar, thereby making available required bagasse for the cogen power plant and molasses

for ethanol plant. The command area of the proposed sugar mill has excellent irrigation

facilities, potential for sustained cane supply to the sugar mill, molasses and biomass

availability.

The aggregated capital investment for the integrated project has been estimated at Rs.

323.70 crore.

Project Rationale

The promoters have extensively and carefully analyzed the present and future scenario of

sugar, ethanol and power industries. They studied carefully the present irrigation facilities

and surplus cane availability in the command area, as well as future potential of irrigation

and additional cane availability.

Most of the villages of the command area fall in Phaltan and nearby tehsils like

Khandala, Koregaon, Wai etc in the Satara district & Baramati from Pune district. Total

area under irrigation under canals & wells is 65221 ha & 113364 ha, respectively. The

area under minor, medium & major irrigation project within Satara district is 16666 ha,

5738 ha & 147985 ha, respectively. Total land under irrigation in the command area

(Phaltan, Khandala, Wai, Koregaon & Baramati tehsils) is around 214504 ha out of total

cultivated area. Major sources for irrigation are mainly canals and major irrigation

projects like Dhom, Veer, Neera Devdhar, Dhom Balakavadi, Jihe Kathapur and medium

irrigation projects like Kavathe Kenjal, Wasana & Wangana along with wells, ponds,

rivers, and tube wells.


II

At present about 11.43 lakh MT of surplus sugarcane is available in the command area.

Due to excellent irrigation facilities in the command area, sugarcane potential is very

good. Hence, promoters expect the availability of required sugarcane of 8.00 lakh MT

within 30 km radius with sustainable sugarcane development in the command area.

Also in view of shortage of power in the State of Maharashtra and with proposed increase

in ethanol blending from 5% to 10 %, the promoters finalized on the bigger capacity of

the said project. The promoters and farmers in the command area, having experience in

sugar industry and sugarcane cultivation, were able to foresee the cane potential in the

command area.

The current policies in Maharashtra and in India are conducive and backed by favorable

regulatory framework for generation of eco-friendly power, as well as regarding support

for private investment in such integrated project.

The promoters also have acknowledged in depth, the socio-economic and environmental

value addition of this integrated project to the local populace, region, State and the

Country, as well as its win-win situation to all the stakeholders involved.

Overall, the entire integrated project is proposed to be set up based on the stand-alone

commercial viability of each component of the project, ensuring that the integration effort

or synergy would enhance individual commercial viabilities of these stand-alone projects.

The Promoters & Project Preparedness

Mr. Shrinivas Pawar has over 24 years’ experience in marketing and general

management. For the last 19 years, he has been in automobile dealerships.

Mr. Pawar started his career with the Sakal Group of newspapers, in charge of their

printing operations in Mumbai. After a few years, he started his own business in

automobile retail.

He believes in giving people a lot of independence. He prefers them to learn while on the

job His dynamic vision, hard work and determination saw him become a master of the

extremely competitive trade of automobile retailing. His success and knowledge has

earned him the confidence of some of the world’s biggest manufacturers: Hyundai,

Honda, Toyota, Al-Nissan.

Mrs. Sharmila Pawar has total experience of around 12 years in the commercial and

administrative management in Sharayu Group. She is actively involved in setting up of

all our Automobile dealerships.

Mrs. Pawar is also chairperson of Baramati Mitra Mandal, a social service organization

and President of Sharayu Foundation, philanthropic foundation of Sharayu Group.


III

Mr. Amarsinh Patil is a Management Graduate and has around 22 year’s hands on

experience in General Management. His forte is leading operations for the group and

managing Human Resource very successfully.

Mr. Patil started his career with Global Tele systems as a Management Trainee and then

moved on to join the family business. He was empowered by the board the task of setting

up the family business in Goa in both fronts in Logistics as well as Automobile retailing.

Sharayu Group which had its presence only in Maharashtra also found a niche for

themselves in Goa. Today we have our Presence in both north & south Goa and flagship

store in Capital City of Panjim.

The promoter’s rich experience in management and strong leadership qualities is thus of

immense help for the growth of LSUL

LSUL already has appointed a technical / managerial team of highly qualified engineers,

contract & arbitration experts, agricultural officers and managerial personnel for

implementation and operation of the captioned integrated project.

To make the venture commercially viable and financially profitable, the capacity of the

sugar plant is decided and fixed at 5000 TCD, cogeneration plant of 30 MW & 60 KLPD

ethanol plant.

The suitability of the soil, increased irrigation facilities and previous experience of the

farmers in cane growing will be helpful in developing the required area for cane

plantation. The Cane trash will act as a support fuel for cogen power plant is easily

available in the command area.

Project in Brief

Sugar Mill (estimated capital investment of Rs. 135.89 crore)

A sugar factory of 5000 TCD capacity with state of the art cane diffusion process & 5000

TCD capacity highly efficient & continuously operating boiling & sugar process houses,

will be installed to manufacture good quality white plantation sugar. The sugar market in

India is quite up-beat and is expected to continue for a foreseeable future. Command area

has sugarcane availability with sugar recovery of about 12%.


IV

Cogen Power Plant (estimated capital investment of Rs. 128.60 crore)

The cogen power project of 30 MW capacity will mainly operate on mill bagasse during

160 season days of the sugar mill and saved bagasse, cane trash & imported coal (in

exigencies) for 65 off-season days. At designed levels, it will generate about 152.28

million kWh and export about 117.43 million kWh through MSEDCL grid for sale to

MSEDCL or to third party consumers, as per prevailing tariff. All steam and power

requirements of the sugar mill, ethanol, cogen auxiliaries and colony, both during season

and off-season periods, will be met internally from the cogen power plant.

It will employ extra high pressure and temperature configuration (87 Kg/cm2 and 515 C)

Boiler (160 TPH) & steam turbine (30 MW-DEC), as well as ESP for emission control

and DCS control system for efficient operation.

The policy for sugar mill cogen plants, both at the Central Government and at the State,

Government of Maharashtra are quite conducive. The MNRE has provided several

financial incentives in terms of capital grants and interest subsidy till date and the same

are likely to continue. The proposed project will be eligible for these incentives as well as

other incentives like accelerated depreciation, income tax benefits, reduced import duties

for renewable energy projects. Indian Renewable Energy Development Agency (IREDA)

Ltd., the lending arm of MNRE, also provides term loan for these projects at soft terms.

The present tariff offered by MERC is Rs. 6.27/kWh.

Ethanol Plant (estimated capital investment of Rs. 59.21 crore)

Ethanol plant having capacity of 60 KLPD will be installed along with sugar and cogen

power plant. Plant will operate for 270 days. Own molasses that is generated from the

sugar factory will be used for 125 days and molasses required for balance 145 days will

be procured from the nearby sugar factories. The Government of India has declared

blending from 5% to 10%. Therefore, the demand of ethanol from is almost doubled.

Also the rate of ethanol is good, which is around Rs. 38 - 41 per liter.

Single stage evaporation technology will be used to reduce the spent wash generation

from about 8 liters per liter of ethanol to 4.5 liters of ethanol in order to reduce pollution.

Bio-compost equipments will be used to treat the spent wash generated from the ethanol

plant along with the Micro 110 culture. The compost fertilizer thus produced will be sold

to the farmers in the nearby villages.


V

Highlights of the Project

Name and Address : M/s Lokmanya Sakhar Udyog Ltd.

Factory Site:

At Kapshi, Tehsil Phaltan,

District Satara

Maharashtra

Constitution & Type : Public limited company

Products : Sugar, Ethanol & Co generated Power

Installed Capacities of the

Integrated Project

Sugar Plant

Ethanol Plant

Cogen Power Plant

:

:

:

5000 TCD (22 hrs basis)

60 KPLD (270 Operating days)

30.00 MW installed capacity

19.77 MW (Avg. exportable power, Season 160 days)

26.60 MW (Avg. exportable power, Off Season 65 days)

Financial Highlights

Project Cost:

(Rs. in Lakh)

Total Project Cost : Sugar Cogen Ethanol Total

Land 400 240 160 800

Site Development 112 52 36 200

Civil works & Buildings : 1887 1754 1020 4661

Indigenous Plant and Machinery : 8885 9281 3918 22084

Miscellaneous Fixed Assets : 390 350 220 960

Prelim & Preoperative Expenses : 995 931 434 2360

Contingencies : 190 189 87 466

Working Capital Margin : 730 63 46 839

Total : 13589 12860 5921 32370


VI

Means of Finance: (Rs. Lakh)

Financing Pattern : Sugar Cogen Ethanol Total

1. Promoters’ Equity : 5028 3323 1125 9476

2. SDF Quasi Equity : 0 1435 1066 2501

3. FI Loan : 8561 8102 3730 20393

Total : 13589 12860 5921 32370

Parameter First

Year

Fifth

Year

Estimated W/C Requirements Rs. Lakh 3355 10666

Estimated Annual Turnover Rs. Lakh 7467 35680

Profit Before Tax Rs. Lakh 72 7132

Accumulated Cash Surplus Rs. Lakh 819 7932

Employment Potential Nos. 445 445

Debt Service Coverage Ratio (DSCR) Average

Maximum

Minimum

1.84

2.88

1.57

Payback Period, Years 5 to 6 years

Internal Rate of Return on total Investment, % 17.21

Strengths of the Project

The main strengths of this integrated project include:

Background and experience of the promoters

Project location in potential sugarcane area

Experienced, willing and committed farmers

Ensured cane availability

Demand supply gap in power in Maharashtra

Demand supply gap in ethanol in India & Maharashtra

Conducive policy / regulatory frame work

Potential for export of branded sugar

Sustained availability of raw materials

Substantial socio-economic and environmental benefits

Latest technology equipment with highest efficiency and

Sound techno commercial viability


VII

Risks & Mitigates

Risk Particular Mitigates

Performance

risk

Ensured sugar cane

& fuel availability

Cane development has been in full progress,

with experienced senior professionals and

staff appointed for the purpose. A full time

fuel manager and dedicated staff has been

proposed for the cogen power plant. Excellent

support from farmers

Marketing risk Sugar sale / export

Firm marketing tie up in offing. Alternative

marketing channels explored. No link with

domestic demand. Value added products

proposed

Regulatory risk

Conversion /

clearances / tariff

order

No difficulty envisaged, as various

governmental agencies have already

expressed their willingness to issue approvals

/ consents. All the approvals in pipeline.

Regulatory process being initiated at MERC

will ensure conducive tariff order for purchase

of power.

Financial risk Financial viability of

the project

Satisfactory DSCR. Equity participation

arranged.

Implementation Schedule

The entire project will be commissioned by February 2016, 11-12 months after the

financial closure expected by January, 2015. Meticulous planning and strong project

management proposed will ensure this schedule.

Conclusions

Over all, the project is well conceived and conceptualized, with sound commercial

viability. The expected financial returns are quite satisfactory. The project is being

implemented by promoters having requisite background and experience and with

proposed employment of experienced professionals, experts and consultants. All

perceived risks have adequate safe guards. The project is recommended for equity

participation and lending by financial institutions.


1

CHAPTER – 1

INTRODUCTION

1.1 Project Background

This Detailed Project Report (DPR) has been prepared for Lokmanya Sakhar

Udyog Limited (LSUL), Kapshi by MITCON Consultancy Services Limited

(MITCON), Pune, for setting up an integrated sugar (5000 TCD capacity),

cogeneration power plant (30 MW installed capacity) and ethanol (60 KLPD

capacity), at Kapshi, Tehsil Phaltan of Satara District, in the Maharashtra State

LSUL has gone ahead in implementation of an integrated project & has taken the

following steps

1.1.1 LSUL is registered under Companies Act, 1956. Appendix I gives

certificate of registration & business commencement certificate &

Appendix II gives Memorandum of Association & Articles of

Association of LSUL.

1.1.2 Appendix III gives the copies of IEM

1.1.3 Appendix IV gives copy of Aerial Distance Certificate issued by Survey

of India.

1.1.4 Appendix V gives copy of NOC received from Grampanchayat.

1.2 Promoter’s Background & Experience

1.2.1 Mr. Shrinivas Pawar has over 24 years’ experience in marketing and

general management. For the last 19 years, he has been in automobile

dealerships.

Mr. Pawar started his career with the Sakal Group of newspapers, in

charge of their printing operations in Mumbai. After a few years, he

started his own business in automobile retail.

He believes in giving people a lot of independence. He prefers them to

learn while on the job His dynamic vision, hard work and determination

saw him become a master of the extremely competitive trade of

automobile retailing. His success and knowledge has earned him the


2

confidence of some of the world’s biggest manufacturers: Hyundai,

Honda, Toyota, Al-Nissan.

Mrs. Sharmila Pawar has total experience of around 12 years in the

commercial and administrative management in Sharayu Group. She is

actively involved in setting up of all our Automobile dealerships.

Mrs. Pawar is also chairperson of Baramati Mitra Mandal, a social service

organization and President of Sharayu Foundation, philanthropic

foundation of Sharayu Group.

Mr. Amarsinh Patil is a Management Graduate and has around 22 year’s

hands on experience in General Management. His forte is leading

operations for the group and managing Human Resource very

successfully.

Mr. Patil started his career with Global Tele systems as a Management

Trainee and then moved on to join the family business. He was

empowered by the board the task of setting up the family business in Goa

in both fronts in Logistics as well as Automobile retailing. Sharayu Group

which had its presence only in Maharashtra also found a niche for

themselves in Goa. Today we have our Presence in both north & south

Goa and flagship store in Capital City of Panjim.

Appendix VI gives detailed bio-data of the promoters and the board of

directors of LSUL.

To make the venture commercially viable and financially profitable, the

capacity of the sugar plant is decided and fixed at 5000 TCD, 60 KLPD

ethanol and a cogeneration plant of 30 MW.

The promoters have a great vision. Sensing the potential of sugarcane in

the region and increasing demand of power & ethanol and also keeping in

view, the needs of the local farmers, those cultivate sugarcane in the

command area.

The integrated project comprises of a sugar mill for the manufacture of

high quality sugar, thereby making available required bagasse for the

cogen power plant and molasses for ethanol plant. The command area of

the proposed sugar mill has excellent irrigation facilities, potential for

sustained cane supply to the sugar mill, molasses and biomass availability.


3

1.2.2 LSUL has now been fully geared up to implement and commission this

integrated project, latest before February, 2016. Latest technologies for

sugar and ethanol manufacture and generation of power will be employed

in this project to ensure optimum efficiency and operating costs for both

the products.

1.2.3 A dedicated Project Team of LSUL has been functioning, along with

appointed experts and consultants, for speedy and successful

commissioning of this project.

1.2.4 LSUL already has appointed a technical / managerial team of highly

qualified engineers, contract & arbitration experts, agricultural officers

and managerial personnel for implementation and operation of the

captioned integrated project.

1.3 Sugar Industry Overview, India & Maharashtra

1.3.1 The origin of Indian sugar industry dates back to 1930, when the first

sugar factory was set up in the pre-independence era. Over the last 76

years, the sugar industry has steadily grown and has become the backbone

of the agricultural and rural economy in India. Today, sugar is the second

largest agro processing industry, next to the textile industry. India is one of

the largest producers of sugar in the world, with a production of over 15

million tones. Sugar factories are located mostly in the rural India. They

act as centers of development, provide largest direct employment in the

rural areas and contribute substantially to the Central and State

exchequers. The prospects of earning foreign exchange from export of

sugar are also quite high.

1.3.2 Sugar factories in India have capacities ranging from 1250 TCD to 10000

TCD. The Indian sugar industry has developed indigenous capabilities for

design, manufacture, supply, operation and maintenance, R&D and cane

development. The major stakeholders of this industry in India are Ministry

of Agriculture, Govt. of India, Ministry of Consumer Affairs, Food and

Public Distribution, federations of co-operative and private sector sugar

factories at the national and the State levels, sugarcane growing farmers,

equipment and technology suppliers, research institutions, consultants and

service providers, financial institutions and Central / State Governments.

1.3.3 A total of 703 sugar factories are in operation today, with additional sugar

factories under implementation in different parts of the nation. The area

under sugar cane cultivation, sugar cane production, sugar cane crushing

in sugar factories, average season days, sugar recovery and sugar

production have increased steadily over the years. The crop yield per

hectare and recovery has improved, particularly in the last decade.


4

1.3.4 Sugar factories in India are spread over the entire country; however 92%

of them are located in 9 States viz., Uttar Pradesh, Bihar, Punjab and

Haryana in the north, Maharashtra and Gujarat in the west and Karnataka,

Andhra Pradesh & Tamil Nadu in the south. More than 80% sugar

factories are below 3500 TCD capacity and balance have higher

capacities. About 44% of the Indian sugar factories are in the co-operative,

9% in Public sectors and balance 47% in the private sector.

1.3.5 Following Table no 1.1 shows the distribution of sugar factories all over

India.

States Public Private Co-op Total

Assam - 1 2 3

Orissa - 4 4 8

West Bengal 1 1 - 2

Punjab - 8 16 24

Haryana - 3 13 16

Rajasthan 1 1 1 3

Uttar Pradesh 33 97 28 158

Uttarakhand 2 4 4 10

Madhya Pradesh 2 12 5 19

Chhattisgarh - - 3 3

Gujarat - 2 22 24

Maharashtra - 55 168 223

Bihar 15 13 - 28

Andhra Pradesh 1 29 14 44

Karnataka 3 45 24 72

Tamil Nadu 3 27 16 46

Puducherry - 1 1 2

Kerala - 1 1 2

Goa - - 1 1

Dadra Nagar &

Haveli - - 1 1

Other 3 7 4 14

All India Total 64 311 328 703


5

Source: Sugar India Year book, 2014

1.3.6 The Ministry of Consumer Affairs, Food & Public Distribution, and

Government of India revised the standard specifications for sugar plant &

equipment, in the year 1987. The special committee finalized

specifications for economical capacity of 2500 TCD, expandable to 3500

TCD, employing higher-pressure boiler and turbine configuration and

efficient equipment, with a potential to export incidental surplus power to

the grid.

1.3.7 The Indian sugar industry was de licensed in the year 1998 vide press note

No. 12 issued by the Government of India, Ministry of Industry,

Department of Industrial Policy and Promotion, on August 31, 1998. The

salient features of de licensing are as follows:

a) The sugar industry stands deleted from the list of industries requiring

compulsory licensing under the provisions of Industries Development

and Regulation Act, 1951. However, in order to avoid unhealthy

competition among sugar factories to procure sugarcane, a minimum

distance of 15 km would continue to be observed between and existing

sugar factory and a new factory, by exercise of powers under the Sugar

Control Order, 1966.

b) The entrepreneurs, who wish to de-license their sugar factory, would

require filing an Industrial Entrepreneur Memoranda (IEM) with the

secretariat of industrial assistance in the Ministry of Industry, as laid


6

down for all de-licensed industries, in terms of the press note dated

August 2, 1991, as amended from time to time.

c) Entrepreneurs who have been issued Letter of Intent (LoI) for

manufacture of sugar need not file an initial IEM. In such cases, the

LoI holder shall only file Part B of the IEM at the time of

commencement of commercial production against the LoI issued to

them. It is however open to entrepreneurs to file an initial IEM (in lieu

of LoI / industrial license held by them) if they so desire, whenever any

variation from the conditions and parameters stipulated in the LoI /

industrial license is contemplated.

1.3.8 The statistics on economic and commercial performance for the industry is

quite fluctuating. The changes in the agro climatic conditions and

sugarcane crop production, as well as the sugar markets have been mainly

responsible for these fluctuations. Efficiency, quality, and integration have

become order of the day for this industry. The industry has grown till

today over the last seven decades. The strength and capacity built so far

will surely help meet these challenges. The following are major options to

meet these challenges:

a. Effecting substantial improvement in cane development and

management, including cultivation practices, varietals and water

management, so as to improve yield and recovery, without affecting

the average fibre content.

b. Effecting visible improvement in the operational efficiencies and

reduction of sugar losses.

c. Effecting and sustaining improvement in energy efficiency, both in

steam and power, for saving of additional bagasse, for both sugar and

by-products manufacture.

d. Expansion of capacities and diversification into absolute

alcohol/ethanol and cogeneration power projects.

e. Effecting adequate capacity building within and without.

f. Maximizing sugar exports for value addition.

g. Effective marketing in the national and international markets.

h. Product quality and diversification.

i. Commercializing the excess power capacity by exporting to utilities or

to other bulk power consumers.

1.3.9 Ministry of Consumer Affairs, Food & Public Distribution, and

Department of Food & Public Distribution Govt. India has issued a revised

order dated 10.11.2006, amending Sugarcane (Control) Order, 1966. The

key provisions of this order are outlined below:


7

a. No new sugar factory shall be set up within a radius of 15 km of any

existing sugar factory or another new sugar factory in a State or two or

more States.

b. Before filing the Industrial Entrepreneur Memorandum (IEM) with a

Central Govt., a certificate from the Cane Commissioner or Director

Sugar or specified authority of the concerned State Govt. shall be

obtained regarding the distance criteria re-defined as above.

c. Submission of performance guarantee of Rs. 1 crore to Chief Director,

Sugar, Dept. of Food & Public Distribution, within 30 days of filing

the IEM, as a surety for implementation of the IEM within the

stipulated or extended time.

d. The stipulated time for taking effective steps shall be 2 years and

commercial production shall commence within 4 years from the date

of filing of the IEM, failing which the IEM shall stand de-recognized

and performance guarantee shall be forfeited.

e. If an IEM remains un-implemented within the stipulated or extended

time limits, the performance guarantee shall be forfeited after giving a

reasonable opportunity of being heard.

f. The above clauses will be applicable for IEM already acknowledged as

on the date of this notification, but who have not taken effective steps

for its implementation, duly defined, shall furnish a performance

guarantee of Rs. 1 crore to the Chief Director, Sugar.

Maharashtra

1.3.10 The growth of sugar industry in the State started prior to independence in

the private sector and in the co-operative sector since 1950 onwards. The

co-operative movement in the State has been witnessed mainly in the

sugar industry. The growth of this industry in the co-operative sector has

certainly helped improve socio-economic life of the rural parts of the

State. The State co-operative sugar factories are directly administered by

the office of Commissioner of Sugar, Ministry of Co-operation and

Government of Maharashtra.

1.3.11 Maharashtra State assumes a leadership position in India related to sugar

industry, in terms of area under sugarcane cultivation, number of sugar

factories, sugarcane production, sugarcane crushing by sugar factories,

yield, recovery and sugar production. There are 209 installed sugar

factories as on date and several entrepreneurs, private companies & co-

operative societies have been issued LoIs / IEMs for production of sugar.


8

1.3.12 The policy for sugar industry in Maharashtra is in line with the Central

Government. The State co-operative sugar factories have faced difficulties

in the recent past, due to fluctuations in the monsoon and sugarcane

availability, competition related to cane prices, inefficient operating and

management practices, socio-economic-political linkages, as well as no

reserve position and poor credit worthiness of most of them.

1.3.13 Cane Availability, Present & Future

Sugarcane has been the major cash crop grown in the State due to

conducive environmental conditions for sugarcane growing, good quality

of soil for cultivation and adequate irrigation facilities. New varieties are

developed along with modern cultivation and irrigation practices. This has

led to increased crop yield & sugar recovery, as compared to the other

States. The highest recovery registered in last season was 11.65%,

averaging 11.00% for the State, compared to 10.25 % all India average.

1.3.14 Sugar factories are expected to have excess cane availability during

coming years, even after fulfilling their own crushing requirements. As of

now, there is no alternative arrangement available to crush this excess

cane. This would extend the crushing period to 200 days, as against

average season days of 160. Surplus sugarcane from bordering States like

Karnataka, Andhra Pradesh & Gujarat will be available in addition to the

excess cane available within.

1.3.15 Number of efforts has been initiated by the office of the Commissioner of

Sugar for improving the physical and financial position of the co-operative

sugar factories. The recent decision of liquidation of badly managed and

financially poor sugar factories in the State and offering them for outright

sale or operation on lease basis is one of the landmark decisions from this

office.


9

1.4 Power Sector Review

All India

1.4.1 The power situation in India is characterized by continued demand supply

gap, despite large capacity additions. The installed capacity of 1,350 MW

in the year 1947 has increased to 2,34,601 MW, as on January 31, 2014.

The generation capacity is expected to add by 88,537 MW, as per the CEA

and Planning Commission estimates for the 12th

Five Year Plan. We have

been able to achieve 25,240 MW (as on Sept 2013.) i.e. 28.71 % of the

planned target. (Source-CEA)

The power situation in India particularly during the last five years has been

precarious. While the peak demand is anticipated to grow from 81,492

MW in 2001-02 to 144,225 MW in year 2013-14, the energy requirement

will from 545,983 Million Units (MUs) to 1,048,533 MUs during the

corresponding period. The energy and peak shortages projected for the

year 2013-14 are 6.7% and 2.3 % respectively. (Source: LGBR:-13-14)

1.4.2 The Government of India (GOI) has acknowledged the overall deficiency

of power supply and quality in India. The importance of decentralized

energy generation from renewable sources, for complimenting centralized

fossil fuel based power generation, has been accepted way for improving

the situation.

1.4.3 As per the estimates of Central Electricity Authority (CEA) and Ministry

of Power, the capacity addition requirements by 2012 AD have been

estimated at 100,000 MW on all India basis. The identified capacities from

Central, State & private sector of about 60,000 MW are in place. The

balance 40,000 MW will have to come from additional projects from

Central, State & private sectors, as well as from captive and renewable

energy sources.

1.4.4 Ministry of Power (MoP), Govt. of India has drawn ambitious plans to

meet the demand. The key objectives set before include access to

electricity for all by 2012, increase in per capita electricity consumption to

1000 units (from 610 units at present), minimum life line consumption of

1 unit per household per day by 2012 and peak energy demands to be fully

met from present shortfall situation. The capacity addition of 100000 MW

during 10th

& 11th five-year plans has been planned, along with 10000


10

MW capacity additions from renewable sources, during the same period.

The total fund requirement for the planned capacity additions have been

estimated at US $ 235 billion. Against a targeted capacity addition of

40,000 MW in the 10th

five year plan period, the capacity addition

achieved was 37,000 MW.

1.4.5 The Electricity Act, 2003 (the Act) provides for de-licensing of power

generation. Sections 61 (h) and 86 (e) of the Act provide provision for the

promotion of co-generation and generation of electricity from renewable

sources of energy. The functions of the State Electricity Regulatory

Commissions (SERCs) in this respect have been defined to promote

cogeneration and generation of electricity from renewable sources of

energy, by providing suitable measures for connectivity with the grid. The

sale of electricity to any persons, as well as purchase of electricity from

such sources, with a percentage of total consumption of electricity in the

area of a distribution licensee, are also required to be defined by SERCs1.

1.4.6 The fiscal incentives offered for renewable energy generation are expected

to continue in the coming period. They primarily include accelerated

depreciation, income tax holiday, customs duty concessions and

exemption in excise duty & sales tax.

1.4.7 The Central Electricity Regulatory Commission (CERC) and SERCs have

come into force to determine tariffs and oversee the electricity sector. The

ERCs have determined tariffs for the purchase of electricity by State

Electricity Boards (SEBs) or Electric Distribution Companies (EDCs)

from various sources, including renewable based on the guidelines from

the Ministry of Power (MoP)/ MNRE, State policies through the public

hearings process.

1.4.8 As of January 31, 2014, India’s installed capacity stands at 2,34,602 MW,

out of which the contribution of the State sector is 39%, followed by the

Central sector at 28% and private sector contributing to the balance 33 %.

Out of the total installed capacity, 68 % is contributed by thermal (coal,

gas & oil), 17 % by hydro, 2.00% by nuclear and 13 % by renewable

sources.

1 Electricity Act, 2003, Ministry of Power, Govt. of India


11

1.4.9 During year 2013-14 the anticipated energy & peak demand is 1,048, 533

MUs / 144,225 MW against the anticipated availability of 978,301 MUs /

140,964 MW having a shortfall of 6.7 % in energy and 8.5% in peak

demand.

1.4.10 Rural Electrification

Rural electrification is a vital program for socio economic development of

rural areas. The objectives are to support economic development and

generate employment. By supplying electricity to rural areas, as an input

for productive uses in agriculture and rural industries, the main aim is to

improve the quality of life of the rural people by supplying electricity for

lighting of homes, shops, community centers and public places in villages.

The Ministry of Power, Govt. of India has introduced the scheme, Rajiv

Gandhi Gramin Vidyutikaran Yojna (RGGVY) in April 2005. This

scheme aims at providing electricity in all villages and habitations in four

years and providing access to electricity to all rural households. This

program has been brought under the ambit of Bharat Nirman. The latest

(as on Dec. 31, 2013) results of this program have been tabulated below:

Table No 1.2: Results of Bharat Nirman Program

Total Number of Villages 593732

Number of Villages Electrified 561751

% Villages Electrified 94.60

Total no of Pump Sets 19594000

Pump sets Energized 19014881

% of Pump sets Electrified 97.04

Maharashtra

1.4.11 Maharashtra State has the largest power system (power generation and

distribution) in India, with 100% rural electrification (as per the earlier

definition of rural electrification with at least one light connection per

village) and access to electricity for 78% households. Power situation in

Maharashtra is better than many of the other States, but still suffers huge

demand and energy shortages.

1.4.12 As of May 30, 2014, the power generation capacity in Maharashtra was

35,167 MW, 35% contributed from the State sector, 46 % contributed by

the private sector and balance 19 % from the Central sector.


12

1.4.13 Maharashtra faces a power shortfall of 1500-2000 MW. The peak demand

increased from 13697 MW in 2002-03 to 19276 MW in 2013-14

registering rise of 41%, due to increase in industrial & commercial

activities.

1.4.14 The Government of Maharashtra recently has taken several steps to

improve power situation in the State. Expansion of existing capacities,

setting up new projects including private sector, promoting captive power

plants, promoting energy efficiency and of course promoting renewable

energy based power generation, have been the major areas.

1.4.15 The Government of Maharashtra had drawn plans of creating a situation of

surplus power by 2011-12 AD. In order to increase power supply,

MSEDCL plans to obtain 750 MW from projects under construction, 2872

MW from projects tied up with National Thermal Power Corporation

(NTPC) and inter-State projects and 2144 MW from Dabhol project (now

known as Ratnagiri Gas & Power Pvt. Ltd.). MAHAGENCO will supply

7500 MW through various planned projects as above and additional 4000

MW will be purchased through competitive tenders from Independent

Power Producers (IPPs). The total additions of 11500 MW are expected to

come on stream between next 3-8 years. Apart from these initiatives, Govt.

of Maharashtra has signed MoU’s with private sector for 12500 MW

generation capacity, which are expected to come on stream between next

5-10 years.

1.4.16 With above scenario, the power shortage is expected to last for a

foreseeable future. The implementation of Cogen Projects with cumulative

exportable capacity of 1000 MW in next three years will help the State to

reduce the shortfall in power demand and energy requirements up to

certain extent.

MAHARASHTRA POWER PROFILE

(Source: Central Electricity Authority)

Maharashtra -Installed Capacity as on May 31, 2014 (MW)

Ownership

Sector

Thermal Nuclear Hydro

RES

(MNRE)

Grand

Total Coal Gas Diesel Total

State 8400 672 0 9072 0 2885 327 12284

Private 10326 180 0 10506 0 447 5303 16256

Central 3313 2624 0 5937 690 0 0 6627

Sub-Total 22039 3476 0 25515 690 3332 5630 35167


13

ACTUAL POWER SUPPLY POSITION-(Source CEA- LGBR - 2014-15)

Period Peak

Demand

(MW)

Peak

Met

(MW)

Peak

Deficit/S

urplus

(MW)

Peak

Deficit/S

urplus

(%)

Energy

Require-

ment (MU)

Energy

Availabi

lity(MU)

Energy

Deficit/

Surplus

(MU)

Energy

Deficit/

Surplus

(%)

9th Plan 12265 10726 -1539 -12.5 80489 73438 -7051 -8.8

2002-03 13697 10984 -2713 -19.8 87152 75472 -11680 -13.4

2003-04 14503 11868 -2635 -18.2 87933 78966 -8967 -10.2

2004-05 14986 12464 -2522 -16.8 92715 81541 -11174 -12.1

2005-06 16069 12360 -3709 -23.1 102765 84117 -18648 -18.1

2006-07 17455 12679 -4776 -27.4 110005 89138 -20867 -19

2007-08 18441 13575 -4866 -26.4 114885 93846 -21039 -18.3

2008-09 18049 13767 -4282 -23.7 121890 95750 -26140 -21.4

2012-13 17934 16765 -1169 -6.5 123984 119972 -4012 -3.2

2013-14 19276 17621 -1655 -8.6 126288 123672 -2616 -2.1

The power supply situation in Maharashtra shows an increasing deficit in

energy and peak demand.


14

1.5 Ethanol Sector Overview

1.5.1 Industry Overview

Molasses is one of by products of sugar industry which is used to produce

rectified spirit/alcohol for making liquor and fuel. Traditionally, molasses

has been used in India to produce rectified spirit and alcohol of higher

than 95% purity for producing liquor for human consumption and for

producing various chemicals. However, with technological developments

in the recent past, molasses has been effectively used to produce bio-

ethanol for blending with petrol as a fuel.

1.5.2 Global Scenario

Brazil is the second largest producer of ethanol globally after U.S. While

U.S. produces ethanol from corn, Brazil manufactures ethanol from

sugarcane. Brazil has mandatory blending ratio of ethanol in gasoline

ranging from 18% to 25%. The blend rate was as high as 25% before

September 2011 and was reduced to 20% due to drop in cane output hence

affecting the ethanol production. Currently, flex-fuel cars, which can use

either ethanol or blended gasoline, in Brazil account for about 53% of the

total car fleet and around 90% of the new vehicles’ sales. The proportion

of the flex-fuel cars are expected to cross 80% by 2020. Currently, the

Brazilian light vehicle fleet has been increasing by 6.7% y-o-y since 2003

with currently 90% of the new vehicles being flex-fuel cars. Thus, there

exists an increasing demand in Brazil for ethanol which is encouraging for

the sugarcane industry.

1.5.3 Indian Scenario

India has 330 distilleries, which produce over 4 billion litres of rectified

spirit (alcohol) a year. Of the total distilleries, about 120 distilleries have

the capacity to distillate 1.8 billion litres (an additional annual ethanol

production capacity of 365 million litres was built up in the last three

years) of conventional ethanol per year which is sufficient to meet

requirement for 7-8% ethanol blending with petrol.

Total ethanol production increased from 1,435 million litres in 2009-10 to

1,934 million litres in 2010-11 on account of higher sugarcane and sugar

production and the estimated ethanol production in 2011-12 is pegged at

2,130 million litres. Ethanol consumption increased from 1,780 million

litres in 2009-10 to 2,010 million litres in 2010-11, owing to improved

molasses supply and steady ethanol demand from competing industries.


15

1.5.4 Government Policy

In 2006, GOI mandated 5% ethanol blending with petrol (EBP)

programme to directly benefit the sugarcane farmers by assuring the sugar

industry a stable and reasonable return for the molasses and then passing a

significant part of the same to the farmers. But since then the programme

has been struggling to take off despite the fact that the Cabinet Committee

on Economic Affairs (CCEA) in November 2009 directed that a financial

penalty be imposed on OMCs for their failure to reach targets.

In August 2010, the CCEA set up the Saumitra Chaudhuri committee for

determining the ethanol pricing after a Committee of Secretaries (CoS)

failed to reach at a consensus. So far, the OMCs have been contracting

ethanol at the provisional procurement price of Rs 27 per litre, fixed by the

CCEA that time.

The Ministry of Petroleum and Oil Marketing Companies (OMCs) put a

specific condition in September 2010, that ethanol should be produced

from domestic molasses only i.e., molasses or alcohol cannot be imported

by the ethanol producers and has to be produced only from molasses and

not sugarcane juice or food grains.

In November 2012, the CCEA has made it mandatory for Oil marketing

companies (OMCs) - Bharat Petroleum, Hindustan Petroleum and Indian

Oil Corporation - to blend 5% ethanol with petrol. This is likely to reduce

the fuel import bill and lower India's dependence on fossil fuel as the

ethanol prices are lower than petrol. OMCs have been blending ethanol

with petrol for the past two years but the policy was partially implemented

in absence of any clear directive. The Committee, headed by the Prime

Minister, has also approved market-based pricing of the biofuel, opening

the market for ethanol producers - mostly sugar companies. This shall

result in an increased demand for ethanol by OMCs.

The national bio-fuel policy, approved by the Government of India, has

plans for a 20% ethanol blending programme by 2017 from the current

mandated 5% blending & recently increased to 10%, to reduce India’s

dependence on fossil fuel imports.


16

1.6 Objectives of the Report

The objective of this assignment is to prepare a bankable Detailed Project Report

(DPR) for 5000 TCD Sugar Plant, 60 KLPD Ethanol and 30 MW capacity Cogen

Power Plant, based on the pre-feasibility evaluation and selected option for

implementing this project. The scope of work is detailed in the work order issued

by LSUL to MITCON for the purpose.

1.7 Methodology

For preparing this Detailed Project Report, MITCON deputed a task team of in-

house coordinators and expert associates. MITCON submitted list of data /

information / documents required for preparation of DPR. MITCON’s task team

undertook several visits to factory site and surrounding areas for collection of data

/ information / documents, nearby 132 kV substation, sugarcane/biomass

assessment, etc., as well as to hold detailed discussions with LSUL management.


17

CHAPTER – 2

CANE & BIO-MASS POTENTIAL

IN THE COMMAND AREA, A REVIEW

2.1 Sugarcane Potential in Command Area

LSUL, sensing the good opportunity to establish in sugar and power sectors along

with ethanol in the district of Satara, has approached MITCON for conducting the

cane survey in the area related to the proposed sugar factory and assess the

feasibility of cane availability on a long term basis.

In the light of the new sugar policy, with almost total decontrol, the cane

command area of the proposed sugar factory is expected to fall in Command area

of Phaltan and nearby tehsils like Khandala, Koregaon, Wai in the Satara district

and Baramati from Pune district. However, LSUL needs to consider economics of

the sugarcane transport if they want to procure cane from neighboring districts.

Hence, the study has been restricted to the cane command area falling under

above-mentioned area of Satara district in general. Evaluation has been also made

for the area falling within in and around 30 Km from the existing factory sites.

This will provide LSUL flexibility to decide the capacity of the plant.

Command area lies in the south-western part of the District. The proposed factory

site is located at Kapshi village in Phaltan tehsil, is at a distance of 25 km from

the Phaltan city, a tehsil headquarter. It is at a distance of about 45 km from the

Satara city, which is a district headquarters. The nearest railway station is at

Wathar (18 km). The nearest air port is Pune, which is at a distance of 122 km

from LSUL site at Kapshi.

Satara district is well known for its cane cultivation and sugar production. Black

soil available in the district is suited for any kind of cultivation and the area is

blessed with adequate irrigation facilities. This district and Phaltan tehsil in

particular is famous for its rich agricultural production, as it is situated near Nira

River.

The major river in the district is Krishna. Koyana, Venna, Kudali, Urmodi, Yerala

and Tarali are its tributaries. Nira is important river which flows on the north

border in the command area. The Krishna flows through the centre of the district.

Koyana is biggest tributary of Krishna. Koyana meets Krishna in Karad city. Nira

river, tributary of Bhima flows on the north border. An area of about 348974

hectares is under irrigation in the district from various sources.


18

Total area under irrigation under canals & wells is 65221 ha & 113364 ha,

respectively. The area under minor, medium & major irrigation project within

Satara district is 16666 ha, 5738 ha & 147985 ha, respectively. Total land under

irrigation in the command area (Phaltan, Khandala, Wai, Koregaon & Baramati

tehsils) is around 214504 ha out of total cultivated area. Major sources for

irrigation are mainly canals and major irrigation projects like Dhom, Veer, Neera

Devdhar, Dhom Balakavadi, Jihe Kathapur and medium irrigation projects like

Kavathe Kenjal, Wasana & Wangana along with wells, ponds, rivers, and tube

wells.

Traditionally, this region has been a Jowar, Wheat, Maize, Tur, Groundnut and

Sugarcane growing belt. Jowar, Tur, Sugarcane and Maize are the main Khariff

crops while Jowar, Wheat, and Gram (Harbara) are the Rabbi crops. The climatic

conditions and rainfall in this area are ideally suited for their growth and hence

these crops have a high yield of growth in the region. Additionally, the rainfall

and irrigation are also adequate for the growth of these crops.

Sugarcane contributes about 13.80% as major crop after Jowar (31.96%) & Bajra

(14.45%). Soyabean, paddy, wheat, maize, gram & other crops constitutes

approximately 40% of the crops grown in district. During the field study it is

observed that farmers are interested in cultivating sugarcane more because of the

cash crop. These farmers are willing to grow sugarcane as it offers better returns

per hectare.

Satara is one of the major districts in Maharashtra in sugar industry. There are 11

operating sugar factories in this district having installed crushing capacity of

35750 MT/day. Annual crushing for season 2013-14 was 61.22 lakh MT at the

average recovery of 11.90%.

Sugarcane is one of the major crops in Satara district. About 69999 hectares of the

total average land is under cultivation of sugarcane in sowing season 2013-14

which is around 13.80% of the total land under major crops cultivation in the

district.

During the field visit it was observed that at present six operating & two proposed

sugar factories are available in the command area.

From climatic data of the region, it is observed that the maximum and minimum

temperatures and relative humidity are quite favourable for growing of sugarcane

and for higher recovery.

The yields of the different varieties of the cane vary, depending on agro-climatic

conditions and water availability, from year to year. On an average the yield is

expected to be around 89 MT/Ha.


19

The command area comprises of five tehsils Phaltan, Koregaon, Khandala & Wai

from Satara district and Baramati from Pune distirct. The total area under

sugarcane cultivation of these five tehsils is 51091 ha, with total sugarcane

production of 4870939 MT.

The command area of LSUL comprises of six operating sugar mills & two

proposed as shown below. The total crushing capacity of six operating mills is

17300 TCD, with total cane crushing of 27.68 lakh MT at 100% capacity

utilization. While the crushing capacity of two proposed sugar mills is 6000 TCD,

with cane crushing of 9.60 lakh MT at 100% capacity utilization.

Considering the cane requirement for 5000 TCD average capacity, for maximum

160 days of crushing will require about 8.00 lakh MT of sugarcane at 100% PLF.

The surplus cane that is available for the proposed sugar mills will be about 11.43

lakh MT.

In order to get better sugar recovery the ideal ratio of Early, Mid late and Late

maturing varieties should be 40:40:20. In the proposed area of LSUL, this should

be encouraged so that farmers, who plant the late maturing varieties, are given

necessary incentives.

It is always advisable for the promoters of the proposed sugar factory to have their

own cane fields. Also friends and supporters should also be made to grow cane.

This will induce confidence in other farmers for cane growing, as it will show that

the management can prove that cane growing is commercially more viable than

other crops and that it will fetch the farmers a good price.

To ensure that the farmers who grow cane get the right type of seed, it is

recommended that the proposed sugar factory have a nursery of their own. Apart

from providing seeds, the nursery can be used for growing newer and better

varieties of cane and then the seed of these newer varieties can be provided to the

farmers.

To encourage farmers and assure continuous and assured supply of cane from

them, it is recommended that LSUL should supply all inputs like seed cane,

fertilisers etc. to farmers through bank loans, by issuing suitable guarantees for

recovery of bank loans.

It is recommended that LSUL should also sponsor cane development schemes on

its own and / or with the help the farmers in its command area, for availing

financial assistance. This will help LSUL in ensuring assured availability of cane,

on a long-term basis.

It is concluded that the command area has very good availability and

potential for cane cultivation and will have surplus cane availability of 11.43

lakh MT/annum of sugarcane.


20

A 5000 TCD capacity sugar factory working for a 160 days season will

require 8.00 lakh MT/annum of cane. The available cane is sufficient for the

proposed sugar mill and hence is recommended that LSUL can go ahead

with 5000 TCD installed capacity.

The irrigation facilities in the command area are excellent and the

availability of surplus cane in the command area and proposed development

of sugarcane in the adjoining tehsils is sufficient to meet the cane

requirements of the proposed sugar factory of LSUL.

2.2 Surplus Biomass Availability

In order to assess agro based fuels available in the region and surrounding areas

and to suggest ways and means to collect and transport these fuels, LSUL’s

assigned MITCON the task of conducting a biomass survey and suggest ways and

means of collecting and transporting the surplus biomass to LSUL’s project site.

MITCON undertook a biomass survey in the command area to identify surplus

biomass available for use in the cogeneration power project. This report presents

the outcome of this survey.

Considering the surplus biomass, and after taking into account 75% collection

efficiency for bought out fuels, LSUL can collect the following quantities of

surplus biomass from the command area.

Surplus Biomass for JMSPIL’s Project after Considering Collection Efficiency of

75 % for Biomass Procured from Outside

(in Ha)

Sr.

No.

Tehsil Rice

Husk

Maize

Cobs

Tur

Stems

G Nut

Shells

Cane

Trash

Total

Reg 1 0 - 25

1 Phaltan 0 1909 21 10 32514 34455

2 Khandala 155 374 9 197 9041 9777

3 Koregaon 30 635 98 127 42934 43824

Sub Total 185 2918 128 335 84489 88055

Reg 2 25 - 50

4 Satara 1033 450 113 1195 35291 38081

5 Wai 802 515 53 450 18476 20297

6 Jawali 1548 216 40 458 2630 4892

7 Mann 0 864 3 3 2096 2965

8 Khatav 6 1480 102 77 7569 9234


21

Sr.

No.

Tehsil Rice

Husk

Maize

Cobs

Tur

Stems

G Nut

Shells

Cane

Trash

Total

9 Bhor 1472 181 55 649 3781 6138

10 Purandar 219 411 23 199 6732 7583

11 Baramati 0 2224 107 44 53261 55636

Sub Total 5079 6341 495 3075 129837 144826

Grand Total 5264 9259 623 3409 214326 232882

MITCON has prepared this report in line with the guidelines that specified by the

Ministry of New & Renewable Energy (MNRE), New Delhi and Indian

Renewable Energy Development Agency (IREDA), New Delhi and which are

now adopted by Maharashtra Energy Development Agency (MEDA), Pune.

The main advantages of the site are:

The site is easily accessible from Satara and Pune

The nearest railway station is at Wathar, which is 18 km from the site

The command area lies in an important jowar, paddy, sugarcane, soyabean,

groundnut, bajra and wheat growing belt.

There are ten sugar factories in the region demarcated as the command area

and surplus bagasse can be used from these sugar factories.

The contribution of each source of biomass to the surplus biomass available

in the command area can be depicted pictorially and is shown below:

Contribution of Various Sources that Yield Surplus Biomass in the Region


22

The average landed price for the various fuels given in Table 1 for the 3 different

regions will vary from as follows:

Rice Husk Rs. 5150/MT to Rs. 5300/MT

Maize Cobs Rs. 1650/MT to Rs. 1800/MT

Tur Stems Rs. 1675/MT to Rs. 1825/MT

Groundnut Shells Rs. 1650/MT to Rs. 1800/MT

Cane Trash Rs. 1250/MT to Rs. 1400/MT

Bagasse Rs. 2450/MT to Rs. 2600/MT

While conducting the primary survey of the command area, prima facie, we have

noted considerable enthusiasm amongst the local people for supplying surplus

biomass to LSUL

The available biomass is sufficient to meet the present needs of the local

population for their fuel and other requirements. The biomass, which is identified

as surplus, is that biomass which is in excess of the requirements of the local

population.

The approximate monthly availability of biomass (at 75% collection efficiency for

outside fuels) for the power generation plant will vary roughly as given in the

figure below.


23

In computing the landed price of biomass, all transportation has been considered

by road. Any fluctuations in the diesel prices will affect the landed price of the

biomass.

Harvesting, transportation, sizing and drying are some of the important operations

to be carried out before the fuel is made ready for use. Depending on the size of

operations and relative cost of labor and capital, varying degrees of automation

could be adopted for each of the above operations. To carry out these fuel

preparation operations successfully and efficiently it is imperative that a

consortium is formed and their work content is established.

The location of biomass banks can initially be in the tehsil towns in the command

area. Once these banks become operational and the biomass linkage mechanism

gets well established, then other villages can be selected for setting up further

banks.

LSUL has to make special arrangements for collection, preparation, processing

and transportation of surplus biomass available in the command area. In this

connection, agencies, like NGOs can be contacted, who have an established

program of self help groups for the poor and needy rural youths / women in

various villages. Under this program rural youths / women are identified and they

can be trained for biomass collection, preparation, processing and transport.

Through some special schemes of Central and State Governments heavily

subsidized biomass processing equipment can be made available to such self-help

groups. LSUL can also enter into an agreement for a reasonable period with such

groups for purchase of biomass from them at a fixed /negotiated price.

It is recommended that LSUL generate a part of its own fuel through energy

plantations. Such a step will ensure that the cogen plant of LSUL is not entirely

dependant on bought out fuel.

We also feel that LSUL should consider the option of briquetting so as to be able

to make maximum utilization of agro-residues in the region. Apart from providing

a fuel with uniform characteristics, briquetting will lower transportation and

handling costs. The storage space required for briquetted fuel is also less than that

required for loose biomass

The social aspect of encouraging briquetting is that it will generate employment

for un-employed youth in the region. Or it will be an additional activity of income

generation to the farmers and their families in the region. As LSUL will also

benefit by having a more uniform fuel for combustion, briquetting, if encouraged,

can be a successful solution to using diverse agro-fuels.


24

With the above study it is concluded that LSUL can collect approximately

2.33 lakh MT/annum of bought out biomass from the command area, which

can be made available for proposed cogeneration plant of LSUL.

Additionally, average surplus bagasse up to 62006 MT can be available from

5 out of 10 operating sugar mills within the command area.


25

CHAPTER – 3

PROJECT CONCEPT, DESIGN & KEY PARAMETERS

3.1 Sugar Plant

3.1.1 The objectives of the sugar plant of the proposed integrated project are

mainly to manufacture quality sugar for national & international markets

at optimum operating and energy efficiencies, as well as provide raw

materials for cogen power plant. The integrated project will push the

product, which has highest realization in the market. The design of the

sugar mill would match the latest and modern technologies, being

employed for the cogen power plant. At the same time, the flexibility of

operation, expansion and diversification, also will be available.

3.1.2 To meet the objectives indicated above, the sugar plant of the integrated

agro energy project will have special emphasis on following:

Highest mill extraction efficiency (more than 97%) and low power

consumption

Lowest steam consumption for the boiling house, lowest boiling house

losses and reduction in capital cost

Lowest power consumption (less than 21 kWh / TCH for electrified

fibrizor and mill drives)

Lowest raw water consumption (practically nil)

Lowest effluent discharge (practically nil)

Lowest labour cost and chemical consumptions

Highest sugar recovery (more than 12% on cane) and sugar quality.

3.1.3 The main parameters of cane crushed from 3rd

year onwards will be as

follows:

Pol % cane, average 14.5%

Recovery, average 12 % on cane

Fibre, average 14.5 % on cane

Bagasse generation, average 30 % on cane

Bagasse moisture, average 48%

Molasses, 4.00% on cane


26

3.1.4 The design parameters of the proposed modern sugar plant have been

indicated in the following table :

Capacity / hr, TCH : 227.27

Capacity / day, on 22 hrs basis, TCD : 5000

Average season days, nos. : 160

Bagasse generation (30% on cane), TPH, @

50% moisture

: 68.18

Bagasse available as fuel (29.2% on cane),

TPH

: 66.36

Sugar produced (avg. 12% recovery), MT : 96000 (@ designed

capacity level)

Sugar quality

: ICUMSA color at 420

nm, <100, moisture

max.0.01 %

Cane preparatory index : 90 +

Imbibition water % fibre : 250 +

Maceration % cane : 30.00

Mixed juice % cane : 100

Primary pol extraction, % : 75

Mill extraction, % : 95

Reduced mill extraction, % : 96.00+

Reduced boiling house extraction, % : 91.00+

Total sugar loss, % cane : Max 2.0

Process steam required, TPH

LP steam at 2.5 kg/cm2 (40% on cane) : 90.91

Process power consumption at 21 kWh / TCH : 4.77

Molasses production (4.00% on cane), MT : 800000 X 4.0% =

32000 MT (@

designed capacity

level)


27

3.2 Cogen Power Plant

3.2.1 The cogen power plant will have installed capacity of 30 MW and will

employ 87 kg/cm2 and 515 C configurations. Bagasse generated from

cane crushing, excluding handling losses and bagacillo requirements will

be available for operation of the high-pressure boiler during season of 160

days.

Saved bagasse, cane trash as well as imported coal, will be used during the

off-season period of about 65 days.

3.2.2 The auxiliary steam consumption for the power plant will be for soot

blowing and other auxiliary consumptions like Steam Jet Air Ejector

(SJAE) & Gland Steam Condenser (GSC) at high pressure, for HP heater

at medium pressure and for de-aerator at low pressure. The auxiliary

power consumption for the power plant will be about 9% & 9.5% of

generation during both seasons and off-season periods.

3.2.3 The colony power requirement will be met by the cogen power plant, both

during season and off season periods.

3.2.4 The brief design parameters for the cogen power plant will be as follows:

Boiler capacity, TPH : 1 x 160

Pressure, kg/cm2 : 87.00

Temperature, C : 515

Turbine capacity, MW : 30

Turbine type : Double extraction - cum

condensing

Season operation, days : 160

Off season operation, days : 65

Operating hours of power plant : 24 hours basis

Fuels used for season operation : Bagasse

Fuels used for off season operation : Saved bagasse, cane trash &

coal

Boiler efficiency, %

- On bagasse / bio-mass / cane trash : 70.00, 2


28

- On imported coal : 80.00, 2

Feed water temperature, C : 165

Captive power consumption, % of

generation

- Season

- Off- season

:

:

2.47 (9.00%)

2.85 (9.50%)

Turbo-generator efficiency, % : 96.00

Utilization level, % : 70 in 1st year, 80 in 2

nd year and

85 from 3rd

year onwards

3.2.5 While, the steam and power cycle design has been worked out as follows,

the heat and mass balances during crushing and non crushing days,

balances of steam, water & condensate, fuel & power have been given in

the enclosed Appendices - VIII.

Sr.

No.

Item Unit Value

Season Operation

1 Avg. cane crushing TCD 5000

2 Gross season days nos. 180

3 Net season days nos. 160

4 Hrs. / day nos. 22

5 Normal cane crushing TCH 227.27

6 Cane crushed Lakh MT 8.00

7 Bagasse generation % cane 30

8 Bagasse generation TPH 68.18

9 Bagasse for bagacillo / handling loss % cane 0.80

TPH 1.82

10 Bagasse available for new boilers TPH 66.36

11 Total equivalent bagasse available for new boilers TPH 66.36

MT 233600

12 Bagasse saved for off season MT 12186

13 Bagasse used by new boilers Kg steam /

kg

2.48

14 Bagasse used by new boilers TPH 57.66

MT 221414

15 Steam generation TPH 143.00


29

Sr.

No.

Item Unit Value

16 Steam consumption TPH

16.1 HP steam @ for SJAE & GSC 0.50 0.72

16.2 MP steam @ 8 kg/cm2

Distillery / ethanol plant 14.00

HP heater I 9.00 12.87

D/s water addition 2.00 0.26

Sub-total 26.61

16.3 LP steam @ 2.5 kg/cm2

Sugar process % cane 40.00 90.91

De-aerator 5.00 7.15

D/s water addition 2.00 1.96

Sub-total 96.10

16.4 Condensing steam 19.57

16.5 Total 143.00

17 Power generation MW 5.21 27.47

18 Power consumption MW

- Sugar process kWh/TCH 21.00 4.77

- Colony 0.10

- Distillery / ENA / ethanol 0.35

- Cogen auxiliaries 9.00 2.47

- Total 7.69

19 Power export

MW 19.77

MUs on 24 hrs basis 75.93

20 Total no. of days / year nos. 225

Off Season Operation

21 Off-season fuel requirement TPH 50.40

22 Total no. of off season days nos. 65

23 No. of hrs / day nos. 24

24 Steam generation TPH 125.00

25 Steam consumption TPH

26.1 HP steam @ for SJAE & GSC 0.50 0.63

26.2 MP steam @ 8 kg/cm2

Distillery/ethanol 14.00


30

Sr.

No.

Item Unit Value

HP heater I 10.00 12.50

- D/s water 2.00 0.53

- Total 25.97

26.3 LP steam @ 2.5 kg/cm2

- De-aerator 7.00 8.75

- D/s water 2.00 0.18

- Total 8.58

26.4 Condensing steam 89.83

26.5 Total 125.00

27 Power generation MW 4.17 30.00

28 Power consumption MW

- Cogen auxiliaries 9.50 2.85

- Sugar process 0.10

- Distillery / ENA / ethanol 0.35

- Colony 0.10

- Total 3.40

29 Power export

- MW 26.60

- MUs 41.50

30 Boiler size (87 kg/cm2 & 515 deg C) TPH 1 160

31 TG size (85 kg/cm2 & 510 deg C) MW 1 30

Appendix-VII & VIII gives the HBDs, Steam, Water / Condensate, Fuel & Power

Balances for Cogen plant during both season and off season.

3.2.6 Water & Condensate Balances

While steam, power and bagasse balances both for season and off season

operations of the cogen power plant have been indicated in section 3.2.5,

the water and condensate balances are given in the following table:

Item Value, TPH

Season Off season

Condensate return from sugar process 86.36 0

Condensate from Steam to de-aerator 7.15 8.75

Blow down flash recovery 0.72 0.63

Condensate from condenser 19.57 89.83

Make up water from DM plant 19.7 14.72

Condensate from HP heater 12.87 12.50

Flow from de-aerator 146.39 126.43


31

3.2.7 Bagasse / Fuel Balance

The bagasse and fuel balances are indicated in the following table

Sr. Item Value

No. Season Off

season

1. Crushing rate, TCH 227.27

2. Bagasse generation at 30.0% on cane, TPH 68.18

3. Bagacillo/handling loss at 0.8% on cane, TPH 1.82

4. Bagasse available as fuel at 29.2% on cane,

TPH,MT

66.36

(233600)

5. Bagasse consumed by new boilers, TPH (MT) 57.66

(221414)

50.40

(78629)

7. Bagasse saved / available for off season

operation, MT

12186

8 Cane Trash requirement, MT (Equivalent bagasse) 21437

9 Imported coal requirement, (MT) (Equivalent

bagasse)

45007

10. Actual cane trash requirement, MT 14616

11. Actual Imported coal requirement, (MT) 18412

12 Saved Bagasse days 10

13 Days on Imported Coal 37

14 Days on cane trash 18

3.2.8 Power Balance

Following table gives the power balance for the season and off-season:

Sr. Item Value, MW

No. Season Off

season

1. Power generation, MW 27.47 30.00

2. Power consumption, MW

- Sugar process (@ 21 kW / TCH 4.77 0.10

- Colony 0.10 0.10

- Ethanol Plant 0.35 0.35

- Cogeneration auxiliaries 2.47 2.85

- Total 7.69 3.40

3. Power export, MW 19.77 26.60

4. Power export at design capacity level, MU 75.93 41.50

5. Total, season + off season MU at design levels 117.43


32

2.2.9 Based on the qualification criteria of the topping cycle under the MERC

tariff order, the eligibility of the proposed project in season has been

worked out as under:

Sr. No. Item Value

1. Net Energy Input (A), M Kcal/hr 129.74

(57.66 TPH x 2250 kcal/kg)

2. Electrical power output (B), M

Kcal/hr

23.62

(27.47 MW x 860 kcal/kWh)

3. Useful thermal output (C) (energy in

the process), M Kcal/hr

69.77

(90.91TPH x 659 kcal/kg +

14 TPH X 704.5 kcal/kg )

4. Total energy output (B+ C), M

kcal/hr

93.40

5. 20% of total energy output (D), M

kcal/hr

18.68

6. Evaluation condition (C D) Yes

7. Efficiency, % (B+C/2 / A) 45.10

Note: Hence, the proposed project is eligible under the MERC tariff order and

qualifies under the same.

3.2.10 Key performance parameters

The key performance parameters for the cogen power plant are given

below:

Sr.

No.

Description Value

1 Steam Generator efficiency, % : 70 2 on bagasse / cane trash &

80 2 on Imported coal

2 Steam to Fuel Ratio, kg bagasse /

kg

: 2.48

3 DEC Turbine efficiency, % : +90%

4 Average Steam to Power Ratio, kg /

kW

Season

Off-Season

:

:

5.21

4.17

5 Auxiliary Power consumption, MW

(%)

Season

Off-Season

:

:

2.47 (9.00)

2.85 (9.50)


33

6 Power Generation / Export :

Season–MW/MU’s

Generation

: 27.47 / 105.48

Export : 19.77 / 75.93

Off-season–MW/MU’s

Generation

: 30.00 / 46.80

Export : 26.60 / 41.50

Annual Total - MU’s

Generation

: 152.28

Export : 117.43

7 Exportable Surplus power

(% Generation)

Season : 71.99

Off-season : 88.67

Total : 77.11

3.3 Ethanol Plant

3.3.1 The proposed ethanol plant will have manufacturing capacity of 60 KLPD.

The ethanol plant will be operated using steam and power that will be

generated from the integrated project.

3.3.2 Ethanol plant will operate on molasses as feed stock during season and on

saved / purchased molasses as feed stock during off-season. With 42%

fermentable sugar in molasses one ton of molasses, will yield 235 lit of

total ethanol. Molasses required per day is worked out in the following

table

The design parameters of the ethanol plant are given in the following

table:

Sr.

No.

Item Ethanol Plant on Own

/ Procured Molasses)

1 No. of days of operation 270

2 Ethanol capacity, KLPD 60

3 Molasses, % cane 4.00

4 Molasses MT 32,000

5 Filter cake, % cane 4.00

6 Filter cake, MT 32,000


34

Sr.

No.

Item Ethanol Plant on Own

/ Procured Molasses)

7 Ethanol recovery, liters / MT of

molasses

235

8 No. of days on

- Own molasses 125

- Procured molasses 145

- Total 270

9 Quantities

Molasses required MT per day 255.32

Molasses required MT per Annum 68,936

- Own Molasses, MT 32,000

- Procured Molasses, MT 36,936

10 MP Steam, TPH (@ 8 kg/cm2 g) 14.0

11 Power, MW 0.35

12 Water, KL/day @ 12 m3/KL 720

13 Spent wash generation per lit of RS

with single stage evaporation

4.5

14 Total spent wash generation / day 270

15 Total spent wash generation per

annum

72900

16 Annual Compost Production, MT

(at 1:2.5 ratio of press mud)

29160


35

3.4 Project Site, Key Features

3.4.1 Site Location (Refer Appendix – IX for site location)

Site location : At Kapshi, Phaltan tehsil

Distance from nearest town / city : Phaltan, 25 Km

Distance from nearest airport : Pune, 112 Km

Distance from nearest Railway Station : Wathar, 18 Km

Distance from nearest water source : Nira Cannel,12 Km

Distance from nearest MSEDCL EHV

substation

: 15 Km, Lonand at 132 kV

substation

The proposed site is ideal for the proposed integrated sugar cogen power

and ethanol project, due to following reasons:

- Required land is available at the project site and is owned by LSUL

- The site is easily accessible by road.

- The command area has huge potential for the sugar cane because of

the huge irrigation potential in the command area and the farmers have

intensive experience in sugar cane cultivation.

- The site is near to the Nira cannel which is about 12 Km from the

proposed factory premises.

- The cane potential and irrigation facilities in the command area are

excellent and will ensure sustained cane availability for the proposed

project.

- The off season non-fossil fuel requirements for the cogen power plant

can be easily met by imported coal. The evacuation of exportable

surplus power from the cogen plant will have to be made through the

substation (132 kV) of MSEDCL, which is 15 km away from the site.

3.4.2 Infrastructure

The site has easy access to latest communication and other social

infrastructure facilities, including telecommunication, schools and

colleges, medical & health facilities, commercial infrastructure, etc. at

Phaltan city, which is a Tehsil Headquarter.

The pattern of rainfall in the Satara district is almost uniform, with

average rainfall of about 522 mm / year. The average annual rainfall in

Phaltan Tehsil is 456 mm, with an average 38 major rainy days. The rainy


36

season mainly ranges between middle of June to September.The ground

water in the area of operation is re-charged every year and is excellent

through out the year.

The temperatures in the command area are conducive to sugarcane

cultivation and have been proved by existing yield, as well as recovery of

sugarcane. The maximum and minimum temperatures respectively are

38 C in summer and 11 C in winter.

The construction power can be easily made available from MSEDCL. The

process steam required at 8 kg/cm2 for ethanol plant and the cogen plant

and 2.5 kg/cm2 for the sugar plant during season will be supplied by the

cogen power plant. The high pressure, medium pressure and low-pressure

steam required for cogen auxiliaries will also be met. The power

requirement for sugar process during season, for cogen auxiliaries and

colony will have to be met from the cogen plant. The steam and power

cycle has been designed accordingly.

The cogeneration plant requires compressed air, both for instrumentation

and for servicing, which is generated by installing the air compressors of

the required capacity, as part of the cogen power plant.

3.4.3 Manpower

The skilled manpower required for operation of sugar, ethanol and cogen

power plants will be easily available from Phaltan city and also from

Satara. LSUL will require about 445 people for operation of proposed

integrated project. LSUL is in a process of appointing required manpower

and has already appointed key top management positions for the purpose.

3.5 Effluent Treatment

3.5.1 Sugar Plant

The sugar plant effluents will be treated in a separate effluent treatment

plant & the discharges will be maintained as per the latest norms of the

MPCB & CPCB. The liquid effluents from the sugar process will be

mainly waste water from various process equipment in the milling &

boiling house sections & the treated water will be used for gardening

purposes. The air emissions in the sugar bagging sections will be limited

to the acceptable limits due to deployment of dust catchers.


37

3.5.2 Cogen Power Plant

The cogen power plant effluents will also be treated in a separate effluent

treatment plant & the discharges will be maintained as per the latest norms

of the MPCB & CPCB. The liquid effluents generated from the cogen

power plant will be mainly from boiler blow down, cooling tower & water

treatment plant blow downs, wash water & other sewage effluents. The

treated water will be used for gardening purposes. The air emissions will

be maintained well within the norms due to deployment of the latest

design electro static precipitator & the ash generated will be either be sold

to brick manufacturer or used in the composting process as a filler

material.

3.5.3 Ethanol Plant

The spent wash of a distillery process is a serious problem by way of

threat to the environment. Its volume from continuous fermentation plant

is as large as 270 KL/day for a distillery of 60 KL/day capacity if

distillation technology of multi pressure distillation with integrated

evaporator system has been used and it may vary as per different

technologies. LSUL proposes to adopt single stage Effluent Treatment

process as detailed below:

1) Multi pressure distillation – In this steam is utilized in direct way for

heating. Hence, spent wash quantity generated is less as compared to

traditional distillation technology.

2) Single Stage evaporation - The spent wash evaporation technology

system is used to concentrate spent wash after biomethanation in

evaporator with continuous recirculation of concentrated spent wash

with in the system until desired concentration is obtained. This entire

concentration process is carried out under vacuum leading to less

consumption of steam and maximum concentration of spent wash with

in less period of time.

3) Bio-composting - Composting is a biological process in which organic

matter is degraded under controlled conditions. It involves microbial

mineralization.

The mixing of concentrated spent wash from evaporation plant and

press-mud (50-70% moisture) is being carried out in trenches with the

help of excavator- cum –loader for mixing, turning, loading and

unloading of compost material. Addition of cow dung will provide


38

bacterial culture required for composting. It is observed that in the first

five days, fungal activity is predominant and in subsequent days

bacterial activity continues until stabilization of organic matter into

humus is accomplished.

This bio-compost will be sold to farmers which is good soil

conditioner.

3.6 Raw Materials

3.6.1 Sugar Plant

The proposed sugar plant of 5000 TCD will require about 8.00 lakh MT of

sugarcane for 160 days crushing season, including sugarcane required for

seeding purposes. A detailed cane availability & potential survey was

undertaken & the results are summarized in Chapter 2. About 11.43 lakh

MT sugarcane is already available within the command area of the

proposed factory site. The irrigation & climatic conditions are quite

conducive. Considering this situation & long term cane development

program being adopted by LSUL, the proposed project will not have any

difficulty for making the required sugar cane available for crushing for the

proposed capacity & even further expansion.

3.6.2 Cogen Power Plant

As indicated in the steam / power cycle design, the total bagasse

available from the sugar mill, from cane crushing of 8.00 lakh MT, as

fuel, will be 2,33,600 MT after bagacillo & handling losses. Out of

this, 2,21,414 MT (57.66 TPH x 24 x 160) will be utilized by the

cogen plant boiler during season, leaving saved bagasse of about

12186 MT for the off season operation.

Total bagasse requirement for the off-season is 78,629 MT (50.40

TPH). Out of which 12186 MT saved bagasse will be utilized, leaving

net bagasse requirement of 66,443 MT. The use of biomass materials

like cane trash available in the command area can meet this

requirement. The net equivalent cane trash required for off-season

operation has been worked at 21437 MT. The imported coal

equivalent bagasse will be used in exigencies upto 15% of total annual

requirement which works out at 45007 MT. The actual quantities of

cane trash & imported coal required will be 14616 MT & 18412 MT,

respectively.

Procurement of raw materials for off-season operation of the cogen

power plant must become a line function of cogen plant operation with

appointment of Fuel Manager and competent field staff for the

purpose.


39

The detailed biomass assessment survey was carried out & results have

been indicated in Chapter 2. It is seen that huge quantity of cane trash

to the tune of 2.14 lakh MT can be easily procured & made available

for off-season operation of the proposed cogen power plant.

Considering the requirement & availability, LSUL will not have any

difficulty in procuring cane trash.

Energy plantation on wasteland in the command area will also be

evaluated and implemented for long-term fuel linkage for the proposed

cogen power plant.

Therefore no difficulty envisaged in getting fuel for cogen plant for

225 days of operation.

3.6.3 Ethanol Plant

Ethanol plant will be operated for 270 days a year. The total molasses

required for the operation at 100% capacity utilization will be 68,936 MT.

At 4.00% on cane the net molasses generated from the sugar factory will

be 32,000. The outside molasses required therefore will be 36,936 MT.

Own molasses will be sufficient for 125 days of operation. For balance

145 days molasses will be procured from nearby sugar factories.

3.7 Utilities & Consumables

3.7.1 Water and power are the main utilities required for operating the

integrated project. Water will be drawn from Nira Cannel the source of

water at a distance of about 12 km from the site. Therefore no difficulty

envisaged in terms of availability of water required for the proposed sugar

complex. Power required for construction and in case of shut down of

plant will be drawn from the MSEDCL grid.

3.7.2 The consumables required for operation of sugar plant include sugar bags,

laboratory and ETP chemicals, oils / lubricants and other chemicals for the

machinery and processing, etc.

The consumables indicated above will be available in substantial

quantities from nearby Phaltan city, and no difficulty will be envisaged.


40

3.8 Manpower

The total direct manpower required for the integrated project has been estimated

at 445. It is most essential for LSUL to define the organization structure

individually for the sugar mill, ethanol plant and the cogen power plant. Appendix

– XI gives recommended manpower charts for each.

It is most essential that the experienced and well-qualified manpower is employed

right from the project development / implementation period, through

advertisement or through head hunting exercise, particularly for the top and key

positions. Manpower training and skill up-gradation must become an integral part

of the HRD policy.

3.9 Implementation Schedule

3.9.1 Project Implementation

For implementing this mega and complex project within the desired time

and cost schedules, it is essential to undertake meticulous planning, right

from the conceptual stages. Following aspects of the project

implementation will be crucial:

Intensifying cane development activities by networking and supporting

the farmers from the command area.

Effecting timely project development activities, including securing

various approvals / NoC’s / permissions for each component of the

integrated project.

Appointment of pre-investment consultants and experts for preparation

of DPRs, approaching select FIs / bankers, rendering required follow

up and achieving financial closure, through raising of required equity

and providing necessary securities. LSUL already has appointed

MITCON, and individual experts / advisors for this work.

Finalization of mode of project implementation, package route and

O&M contracts for individual project components, along with strong

owner engineering / consultancy team for effective monitoring of the

implementation / commissioning of each component as per the

schedule, is recommended, considering the complexities of individual

projects.

LSUL proposes to appoint experienced project engineering

management consultancy firm, as well as experienced in-house project

team for the purpose.

Manpower and resource mobilization at required time and effectively

Interface between the sugar mill, cogen power plant and ethanol plant


41

3.9.2 Project Schedule

The zero date of the project starts from the date of achieving financial

closure, expected to be complete by January, 2015. The integrated project

will be commissioned and start commercial production by February, 2016.

The project schedule will have main components as follows

Activities Expected Completion Date

Project development activities up to

financial closure

January, 2015

Sugar plant February, 2016

Ethanol plant February, 2016

Cogen power plant February, 2016

Entire integrated project February, 2016

Stabilization & development of MIS February, 2016

Commercial production February, 2016

The bar chart for implementation of the above components is enclosed as

Appendix –X. The detailed PERT / CPM networks for individual

components and overall project will have to be prepared by the time of

achieving the financial closure.The major activities after the financial

closure for each component will include:

Appointment of owner engineer / consultant, in-house project team

and project architect

Basic engineering & finalizing outline specifications

Detailed design engineering and specifications

Preparation of package bids, bidding, bid evaluation, recommendations

and contracting for civil, mechanical, electrical and instrumentation

components, as well as BoPs

Kick off meetings with individual vendors / contractors

Vendor drawing review and approvals, inspection and expediting and

delivery at site

Site supervision for erection, testing & commissioning

Bidding, contracting and signing of O&M contracts

Plant stabilization and development of MIS


42

CHAPTER – 4

TECHNICAL SPECIFICATIONS

4.1 Sugar Plant:

Appendix-XIV gives the detailed technical specifications for sugar plant covering,

technical specifications of the entire plant and equipment such as cane handling &

feeding equipment, cane diffuser section, clarification section, evaporation &

boiling plant, cooling, curing and grading plant, , technical specifications for

energy efficiency improvement equipment, electrical distribution system, control

& instrumentation system, etc.

4.2 Cogen Power Plant:

Appendix–XIV gives the detailed technical specifications for cogen power plant

covering technical specifications for boiler & auxiliaries, steam turbine &

auxiliaries, electrtrial evacuation & distribution system, water treatment plant,

cooling tower & auxiliaries, fuel & ash handling, instrumentation & control

equipment, power house EOT crane, etc.

4.3 Ethanol Plant:

Appendix–XIV gives the detailed technical specifications for ethanol plant

covering technical specifications for molasses handling section, fermentation

section, distillation section, ethanol section, evaporation section, biogas, bio-

composting, alcohol storage, utilities section, etc.


43

CHAPTER – 5

PLANT LAYOUT

5.1 Layout Considerations

5.1.1 Layout design issues

Major layout design issues, which have been considered while developing

the proposed plant layout, are as follows:

Available land already acquired for the integrated project at site

location

Topography of the land being acquired and contour limitations

Area requirements for various plant buildings, storage areas, colony,

admin building, miscellaneous areas, etc.

Direction / velocities of wind.

Likely ingress of bagasse / bio-mass / coal on to cooling tower,

transformers etc. and precautions to be taken to mitigate

Optimum men and material movement

Minimum length of high pressure piping

Minimum lengths of interface systems between the power plant and

sugar mill

Disposal of ash / press mud

Routing of overhead EHV transmission line

Vastu Shastra

5.1.2 Area requirement & Layout

The Architect of LSUL has prepared preliminary plant layout based on

acquired land. The plant layout is presented in Appendix –XIII with the

details of area requirements for different sections of the proposed plant.


44

5.1.3 Ash, Effluent & Sewage Disposal

Ash

At 100% capacity utilization of the proposed power plant, around 2.34

lakh MT of bagasse, 14616 MT of cane trash and 18412 MT imported coal

will be burnt during season and off-season operations. Annual ash

generation from this quantity of bagasse / cane trash / coal will be about

11,847 MT. This ash will be mixed with the press mud and shall be

distributed free to the farmers during season & during off-season if coal is

used, the ash will be given to nearby brick manufacturers.

Effluent

Wastewater from a power plant does not have any significant BOD / COD

level. All wastewater will be neutralized prior to discharging in the

existing sugar plant ETP.

Sewage

All sewage will be collected in a common septic tank and discharges as

per accepted norms.

5.2 Plant Layout

5.2.1 General

The proposed sugar and cogeneration power plants will be located

adjacent to each other. The sugar mill layout will be as shown in the

enclosed layout drawing. Ethanol plant will be suitably located separately,

but near to the molasses tanks.

The cogen plant will be conveniently located within close proximity to the

sugar mill and bagasse storage area and allows optimal arrangement of

piping, switchyard, bagasse conveyors, other cogen plant facilities, and

access roads. All above ground pipe rack will support steam and feed

water piping and cables for instrumentation and control, for the boiler and

between the cogen plant building and the sugar mill. All other piping and

cables for other outdoor equipment such as tanks, pumps and the cooling

tower will be under ground.


45

5.2.2 Layout of Major Outdoor Equipment

The boiler will be designed for outdoor operation. The boiler will include

a electro-static-precipitator and a RCC chimney. The self-supporting

chimney will satisfy the environmental norms and will be RCC.

Stack Height Calculation

Stack height is calculated using following formula

H = 14 (Q) 0.3

H is height of Chimney

Q = Quantity of fuel (kg/hr) x sulphur content (%) x 2

100

The sulphur content in the bagasse is negligible (around 0.1 %) as

compared to imported coal (1%). Therefore, the stack height will be

calculated on the basis of imported coal.

The bagasse will be fed to the boilers via the conveyor system from the

milling section of the sugar plant. The conveyor system will also transport

excess bagasse between the boilers and the bagasse storage yard, through

RBC.

During the crushing season excess bagasse, if any from the mill will go

directly to the storage yard after feeding the boilers. During the non-

crushing season stored bagasse and equivalent biomass or other fuels will

be fed to the boilers from the bagasse storage yard/coal yard.

Ash handling will be accomplished by the use of hoppers and screw and

belt conveyors. The type, location and number of conveyors will be

decided during the detailed engineering stage of the project.

All water and storage tanks will be located outdoors. The tanks will be

field erected and constructed of carbon steel typically with an exception of

DM tank, which will be stainless steel or epoxy coated carbon steel. The

tanks will be located to allow for optimal arrangements of piping and will

be accessible by road.


46

The cooling towers and the circulating water pump house will be located

outdoors.

The 132 kV switchyard will be located adjacent to the main co-generation

building close to the switch gear area. The switchyard will include the

power transformer, insulators, tower structure, circuit breakers, isolators,

meters etc.

5.2.3 Co-generation Plant Layout

Cogeneration power plant will house the steam turbine generator and its

auxiliaries, the condenser and its auxiliaries, the control room, the boiler

feed pumps, the electrical equipment room (distribution transformers,

switchgear, motor control centers), battery room, etc.

The steam turbine generator will be supported on a reinforced concrete

pedestal. The building superstructure will be RCC construction. Pitched

roof will be provided to facilitate drainage.

Control room will be in brick wall construction and the walls will be

plastered. The building structure will also be used to support piping, cable

trays, conduits, etc. Suitable coating materials will be used for interior and

exterior surfaces. A special coating will be provided in the acid/caustic

soda storage area and battery room.

Proper air conditioning will be provided for the control room. For all other

areas adequate ventilation system will be provided as per the State

regulations. Special precautions will be taken for air intake and exhaust

for the emergency diesel area and for the battery room.

A 75 MT capacity overhead crane with a 20 MT capacity auxiliary hook

will be provided over the turbine generator bay. Its capacity will be

adequate to provide lifting capability to meet the needs of all steam turbine

generator components including erection. Roll up doors will be located in

the steam turbine area and the condenser area, to provide access for

maintenance. Single and double doors will also be provided throughout

the building for personnel access and maintenance of smaller equipment.


47

5.3 Approach & Internal Roads

The site is located adjacent to the State highway, with approach road already

existing and thereby not requiring any additional approach road. Required internal

roads for movement of men and material will have to be constructed within the

plant area.


48

CHAPTER – 6

ENVIRONMENT & SOCIO-ECONOMIC BENEFITS

6.1 The proposed integrated project of LSUL will be a landmark achievement in the

country. It will truly become a role model of utilizing the cane crop in the most

efficient manner for eco-friendly products like sugar and renewable and

decentralized power generation. The optimum production of conventional but quality

sugar will cater to value added domestic and international markets. The sound

techno-economic and commercial viability of this project, coupled with highest

efficiency in all aspects of product manufacture, will pave the way for integration of

sugar industry in the country.

Establishment of the latest and most efficient technologies adopted for cane crop

development, sugar manufacture, cogen power generation and biomass fuel linkages

will also help the Indian sugar industry and equipment manufacturers to grow leaps

and bounds, at the national and the international levels.

6.2 The socio-economic benefits arising out of this project for the local populace will

include creation of direct and indirect jobs and consequent rise in the income levels,

associated commercial and social infrastructure development in the mofussil areas,

improved quality and availability of power due to grid benefits (in terms of deemed

generation and power factor improvement), better environment and higher returns

for the cane crop due to higher yield and cane price.

6.3 At the national and the State levels, the benefits include decentralized power

generation, reduction in T&D loss, reduced emissions, reduction in the imports of

petroleum products, increased tax revenues and reduction in the transportation costs.

6.4 The project will have excellent multiplier effect and will become truly a win-win

situation for all the stakeholders. Thus, the proposed project has substantial socio-

economic and environmental benefits at the local, the State, the Regional and the

National levels.


49

CHAPTER – 7

PROJECT PREPAREDNESS

7.1 NoC’s / Approvals / Permissions

List of NoC’s / Approvals / Permissions required & their status as of October,

2013 is indicated in the following table:

Project Component / Item Status

of NoC / Approval Completed Under Process Yet to start

General

Registration of LSUL

Excise, sales tax, professional tax

& income tax registrations

PF / ESI registrations

Shop act licenses

Consent to establish for integrated

sugar, cogen & power plant

Consent to Operate for integrated

sugar, cogen & power plant ,

environmental clearance & consent

to operate

Environmental Clearance for

integrated sugar, cogen & power

plant

Import / export licenses

NoC from local gram panchayat

Factory inspector approval

Electrical inspector approval

Sugar Plant

IEM license for sugar

Cogen Power Plant

IEM license for Cogen

NoC from MEDA

PPA with MSEDCL/Third party

Chimney height clearance from

AAI, if required

SLD approval from EI

Ethanol Plant

IEM

Letter of Intent & various

permissions / licenses from State

Excise


50

7.2 Management & Administration

LSUL has already deputed a competent Project Team for developing and

implementing this project at Village Kapshi, Phaltan Tehsil. The LSUL Board

will take a review of progress of work on a monthly basis, to ensure speedy and

successful implementation of this project.

7.3 Technical & Financial Tie Ups

LSUL has the experience and know how for adopting the latest technologies in

both the components of the integrated project. Consultants and experts will be

appointed, as and when required, during the development and implementation of

this project. LSUL already has appointed experts for sugar plants and has

appointed MITCON Consultancy & Engg Services Ltd., as Consultant, for

preparation of DPR for the integrated project.

LSUL will bring in the required equity, as well as provide the negotiated

securities to the bankers and financial institutions. The term loan and working

capital loan for integrated project will be taken through nationalized banks / SDF.

LSUL will not face any difficulty for arranging technical and financial tie ups

required for the captioned project.

7.4 Project Management

The project management for the integrated project will be under able leadership of

promoters/directors, assisted by experienced technical team. The appointed

experts, consultants and LSUL, site office staff will together work in tandem and

develop / implement this project.

Required top-level manpower will be appointed shortly. Project monitoring /

management will be almost on daily basis and as per the final bar chart /

implementation schedule, developed after ordering of main plant and equipment.


51

CHAPTER – 8

ESTIMATED CAPITAL EXPENDITURE

8.1 Land & Site Development (Refer Annexure – 1)

LSUL has already acquired around 17 Ha land in the name of Company &

…….Ha of land in the name of Directors at Kapshi, Phaltan Tehsil. The land is

sufficient for housing sugar, ethanol and cogen power plant for the proposed

capacities.

The cost of land cumulates to Rs. 800 lakh. Out of this, Rs. 400 lakh has been

allocated to the sugar plant, Rs. 240 lakh to cogen plant and balance Rs. 160 lakh

to the ethanol plant. This allocation has been made based on the area required by

each component of the project.

The site development expenses include leveling and approach roads, fencing,

gates, storm drains and internal roads. The preliminary estimates indicate

expenditure of about Rs. 200 lakh, Rs. 112 lakh for sugar project, Rs. 52 lakh for

the cogen power plant & Rs. 36 lakh for ethanol plant.

8.2 Civil Works (Refer Annexure – 2)

8.2.1 The main civil works for the cogen power plant and their estimated costs

are indicated in the following table:

Item Cost, Rs. lakh

1. Power House building (TG hall & maintenance bay) 500

2. Turbo Alternator & other Auxiliary Foundations 200

3. Boiler and Auxiliary Foundations 175

4. Switchyard / SEB substation Foundations 70

5. Water Treatment Plant 60

6. Tanks, fuel & ash handling conveyor foundations 30

7. Coal crusher & shed 75

8. Shed & open bagasse storage yard 40

9. RCC Chimney 120

10. RCC Cooling Tower 200

11. Raw water tank 150

11. Residential Quarters & Admin Buildings 100

12.Architect fees 34

Total 1754


52

Based on the actual civil costs incurred for similar capacity cogen power

plants, the civil estimates have been worked out at Rs. 1754.00 lakh,

including Architect’s fees. The appointed architect for the project will

work out detailed estimates and civil drawings (based on the inputs

received by the equipment suppliers and labour / material rates at the site

location).

8.2.2 The main civil work components for the sugar project include the

following:

The main factory building for in-housing all sugar plant equipment

including cane carrier, preparation area, mill house, evaporator &

clarification house, boiling house & sugar house, estimated cost of Rs.

700 lakh

Sugar machinery foundations, estimated cost of Rs. 400 lakh

Miscellaneous buildings & civil works including workshops, stores,

injection pump house, weigh bridge, ETP, etc., estimated cost at Rs.

300 lakh

Raw water tanks at Rs 100 lakh

Admin & other related buildings, estimated cost at Rs. 100 lakh

Sugar go-downs of suitable size, estimated cost of Rs. 250 lakh

Architect fees, estimated at Rs. 37 lakh

Thus, the total preliminary estimates for the civil works have been worked

out at Rs. 1887 lakh.

8.2.3 The civil works for 60 KLPD ethanol plant includes foundation for storage

tanks, central excise office, miscellaneous foundations, molasses storage

tanks, storage lagoons for raw spent wash, water supply & lighting

arrangements inside the buildings, etc. These costs have been estimated at

Rs. 1020 lakh.

The preliminary estimates have been made based on the actual civil work

costs for similar capacity ethanol plant and labour / material rates at the

site location. The project architect will prepare detailed estimates and civil

drawings.

8.2.4 The total preliminary civil estimates for the integrated project,

accumulates to Rs. 4661 lakh.


53

8.3 Plant & Machinery Equipment (Refer Annexure 3 )

8.3.1 The main items of equipment for the cogen power plant and their

estimated erected costs are given in the following table:

Item and brief specifications Estimated Erected

Cost, Rs. lakh

Boiler & auxiliaries 1x 160 TPH

(87 kg/cm2, 515 deg C)

3200

Steam turbine and generator and auxiliaries

(1x 30 MW)

2200

Electrical distribution system 300

Tie line cost 750

Bay at MSETCL 150

Piping, valves, PRDSH, fittings etc. 250

DCS & plant automation 135

Bagasse, coal & Ash handling Equipment

including: Belt conveyor, Yard scraper conveyor,

Distribution belts etc

500

Cooling towers and auxiliaries excluding civil

works

150

WTP Including raw water pumping pre-treatment 150

D.G set 80

Taxes & Duties 1416

Total 9281

Based on the discussions with reputed machinery suppliers and possible

negotiation margins, the estimated erected cost of plant and equipment for

the cogen power plant has been worked out at Rs. 9281 lakh.

8.3.2 The specifications for main plant and machinery required for 5000 TCD

capacity sugar mill, are elaborated in Appendix XIV.

Based on the discussions with reputed machinery suppliers and possible

negotiation margins, the erected cost of the sugar mill equipment have

been worked out Rs. 8885 lakh.

8.3.3 Based on the discussions with reputed machinery suppliers and possible

negotiation margins, the erected cost of the ethanol plant equipment has

been worked out Rs. 3918 lakh

8.3.4 The total erected cost of equipment for the integrated project has been

estimated at Rs. 22084 lakh.


54

8.4 Miscellaneous Fixed Assets (Refer Annexure – 4)

The total miscellaneous fixed assets for the integrated project have been worked

out at Rs. 960 lakh, Rs. 390 lakh for the sugar project, Rs. 350 lakh for the cogen

power plant & Rs. 220 lakh for ethanol plant.

The main miscellaneous equipment for sugar project includes spares, tools &

tackles, chemical lab equipment, lab & workshop equipment, vehicles, weighing

machines, AC ventilation system, water supply scheme, fire fighting, computers,

office furniture & fixtures, walkie-talkies, dishnet, soft water plants & storage

tanks & compressed air system etc. The total cost of miscellaneous fixed assets

for sugar plant accumulates to Rs. 390 lakh.

The main miscellaneous fixed assets for the cogen power plant include office

equipments, spares / tools & tackles, chemical lab equipments laboratory

equipment weighing machines, Workshop equipment, light & heavy vehicles,

walkie-talkies, dish net etc, AC ventilation system, water supply scheme, fire

fighting & compressed air system. The total miscellaneous fixed assets for cogen

power plant accumulate to Rs. 350 lakh.

The main miscellaneous equipment for ethanol project includes spares, tools &

tackles, chemical lab equipment, lab & workshop equipment, vehicles, weighing

machines; molasses storage tanks computers, office furniture & fixtures, walkie-

talkie dishnet, fire fighting systems & compressed air system etc. The total cost of

miscellaneous fixed assets for ethanol plant accumulates to Rs. 220 lakh.

8.5 Preliminary & Pre-operative Expenses (Refer Annexure – 5)

The preliminary expenses include expenses for preparation of DPRs, appraisal

and loan syndication and legal / administrative expenses.

The pre-operative expenses include establishment charges, rent / rates / taxes,

traveling expenses, start up expenses including wages / salaries / raw material

expenses, project management charges including supervision, project insurance

during construction, interest charges during construction, mortgage expenses,

banker’s charges, stamp duty expenses, other miscellaneous expenses, etc.

The total preliminary and pre-operative expenses for the integrated project have

been estimated at Rs. 2360 lakh, Rs. 995 lakh for sugar project, Rs. 931 lakh for

the cogen power plant & Rs. 434 for ethanol project.


55

8.6 Contingencies

The contingencies have been worked out at 1.5% of the non-firm items of land,

site development, civil structures, plant & machinery, miscellaneous fixed assets

& preoperative expenses. They accumulate to Rs. 466 lakh, Rs. 190 lakh for

sugar plant, Rs. 189 lakh for cogen power & Rs. 87 lakh for ethanol project.

8.7 Stock Levels & Working Capital Assessment (Refer Annexure – 7)

The estimated stock levels for different components of the integrated project have

been tabulated below:

Item Stocking level, days / project component

Cogen power Ethanol Sugar

Raw materials 30 30 -

Consumables & packing

materials

30 30 30

Finished goods - 30 45

WIP - 3 3

Debtors 45 - -

The margin money at 25% works out to Rs. 839 lakh, allocated as Rs. 730 lakh

for sugar plant, Rs. 63 lakh for cogen power and Rs. 46 Lakh for ethanol plant.

This allocation depends on the estimated stock levels and their values, for each

project component.


56

CHAPTER – 9

FINANCIAL VIABILITY

9.1 Basis & Assumptions

9.1.1 The entire financial analysis of the project has been worked out on a

computer, using specific project feasibility software developed for the

purpose.

Annexures-1 to 19 gives the basis and details of various items of project,

along with item wise costs. Schedules-A to I represent results of the

analysis in terms of cost of project and means of finance (Schedule-A),

project profitability and cost of production (Schedule-B), Debt Service

Coverage Ratio (DSCR) (Schedule-C), Cash Flow Statements (Schedule

- D), Balance Sheet Forecasts (Schedule -E), etc.

9.1.2 Each item of capital cost is based on the estimated erected costs for

various equipment contractors. Annexures-1 to 6 respectively give land

and site development costs, civil works, erected costs of indigenous /

imported equipment, , erected costs of miscellaneous fixed assets and

preliminary and pre-operative expenses. While calculating the cost of site

development and civil works, the prevailing rates for labor, material, etc

have been assumed.

9.1.3 The contingency provision has been made on all non-firm items of the

project cost and has been considered at 1.5% for each component of the

project, including pre-operative expenses (Refer annexure 6).

9.1.4 The installed capacities and capacity utilization levels for sugar and cogen

power plants and respective annual productions have been shown in the

following table:


57

Item Year

1 2 3 4 5

Sugar

No. of days 60 160 160 160 160

No. of hrs. 22 22 22 22 22

Crushing rate, TCH 227 227 227 227 227

Annual installed crushing

capacity, MT 300000 800000 800000 800000 800000

Utilization 70 80 85 85 85

Annual cane crushing, MT 210000 640000 680000 680000 680000

Total sugar recovery, %

cane 11.80 11.90 12.00 12.00 12.00

Total Sugar production, MT 24780 76160 81600 81600 81600

Cogen

Season

No. of days 60 160 160 160 160

No. of hrs. 24 24 24 24 24

Export capacity, MW 19.77 19.77 19.77 19.77 19.77

Export capacity, MU 28.47 75.93 75.93 75.93 75.93

Off season

No. of days 0 65 65 65 65

No. of hrs. 24 24 24 24 24

Export capacity, MW 0 26.60 26.60 26.60 26.60

Export capacity, MU 0 41.50 41.50 41.50 41.50

Capacity utilization, % 70 80 85 85 85

Exportable surplus, MU’s

Season 19.93 60.73 64.53 64.53 64.53

Off season 0.00 33.20 35.27 35.27 35.27

Total 19.93 93.93 99.80 99.80 99.80

Ethanol

Installed Capacity, KLPD 60 60 60 60 60

No. of days 60 270 270 270 270

Annul Installed Capacity,

KL 3600 16200 16200 16200 16200

Capacity utilization, % 70 80 85 85 85

Estimated Annual Prodn. of

Ethanol, KL 2520 12960 13770 13770 13770

Estimated Annual Prodn. of

Bio-compost, MT 4536 23328 24786 24786 24786


58

9.1.5 The stock levels for various items of working capital for each component

of the project have been elaborated in section 7.7 (Refer Annexure-7). The

margin money has been considered at 25% of total requirement of the first

year and c/c facility at 75% of total requirement. The interest rate on c/c

facility is taken at 13.5%, prevailing banking rate for that level of c/c limit.

9.1.6 Project income is based on the quantities of power exported through

MSEDCL grid to third party / power trader, sale of sugar and ethanol, as

well as from sale of bio-compost fertilizer.

In view of the prevailing rate provided by power traders, the sale of power

has been assumed at Rs. 6.27 / kWh.

The avg. sale of free sugar has been taken at Rs. 29500 / MT constant

through the year of operation. The sale of ethanol and bio-compost has

been considered at Rs 38/litre and Rs 500/MT respectively.

Refer Annexure – 8 for estimated annual production and sales value for all

the product streams.

9.1.7 The net cane price has been taken at Rs. 2800 / MT including harvesting

and transportation charges and applicable purchase tax.

14,616 MT of cane trash is estimated at 100% capacity utilization at

landed cost of Rs. 1800/ MT.

18,412 MT of Imported coal is estimated at 100% capacity utilization at

landed cost of Rs. 5500/ MT.

36,936 MT molasses is estimated at 100% capacity utilization at landed

cost of Rs. 4500 / MT.

Refer Annexure 9 for particulars of indigenous raw materials explained

above.

9.1.8 The consumables for cogen power and sugar respectively have been taken

at Rs. 60 / thousand kWh and Rs. 25 / MT cane crushed & Rs.900/KL of

ethanol. The packing materials are estimated to cost at Rs. 50/ quintal.

(Refer Annexure-10 for details).

9.1.9 The requirement of direct manpower has been estimated based on the

equipment / facilities to be operated in each section of the integrated

project. Total manpower requirement has been estimated at 250 for sugar,

115 for cogen power plant & 80 for ethanol (total 445). Every year 10%

increment and 15% benefits have been provided (Refer Annexure-12).


59

9.1.10 Repairs and maintenance costs have been estimated at 2% on cost of civil

works and on cost of miscellaneous fixed assets and 2.5% on cost of plant

equipment (Refer Annexure-13), with 2% increase every year.

9.1.11 Other manufacturing expenses include rent, rates and taxes, electricity

charges, insurance charges for fixed assets and stocks, miscellaneous

expenses and contingencies (Refer Annexure-14).

9.1.12 Administrative overheads include administrative staff salary and expenses

like printing and stationery, postage and telephone, traveling and

conveyance, legal and other expenses (Annexure 15). Repairs and

maintenance (Refer Annexure-13) and selling and distribution overheads

(Annexure –16) have been estimated as detailed in respective Annexure.

9.1.13 The repayments of interests and term loans for each component of the

project have been considered based on the means of finance and the terms

for debts for each. The term loans for integrated sugar, cogen & ethanol

power plants will be at 13.5% rate, payable within 7 years and 2 year

moratorium from disbursement. The SDF quasi equity for cogen &

ethanol project will be at the rate of 7% and payable from FY-2018-19 and

FY-2016-17 year respectively.

9.1.14 Depreciation has been calculated by following methods and rates (Refer

Annexure-18 for details).

Item of capital cost WDV SLM

Site development and civil structure 10.00 3.34

Plant & Machinery 15.00 5.28

Miscellaneous assets 15.00 5.28

9.1.15 Annexure-19 gives income tax calculation as per relevant tax laws

applicable.

9.1.16 Preliminary expenses have been written off equally in 10 years. For

calculating interest during the construction, implementation period,

interest charges, quantum of term loan and de-rating factor of 0.3 over the

implementation period have been considered.

9.1.17 Based on above assumptions, the detailed project financial analysis for a

period of 10 years have been worked out and are presented in Schedules-A

to J.


60

9.2 Cost Summary

Based on the capital cost break up worked out in Chapter 8, the project cost

summary for the entire integrated project is given in the following table (Also

refer Schedule A): (Rs. Lakh)

Total Project Cost : Sugar Cogen Ethanol Total

Land : 400 240 160 800

Site Development : 112 52 36 200

Civil works & Buildings : 1887 1754 1020 4661

Indigenous Plant and Machinery : 8885 9281 3918 22084

Miscellaneous Fixed Assets : 390 350 220 960

Prelim & Preoperative Expenses : 995 931 434 2360

Contingencies : 190 189 87 466

Working Capital Margin : 730 63 46 839

Total : 13589 12860 5921 32370

9.3 Means of Finance

The proposed means of finance is indicated below. (Refer Schedule – A).

(Rs. Lakh)

Financing Pattern : Sugar Cogen Ethanol Total

1. Promoters’ Equity : 5028 3323 1125 9476

2. SDF Quasi Equity : 0 1435 1066 2501

3. FI Loan : 8561 8102 3730 20393

Total : 13589 12860 5921 32370

9.4 Financial Viability Indicators

9.4.1 Schedules A to J establish results of the project financial analysis, in terms

of total project cost and means of finance, project profitability, debt

service coverage ratio, cash flow statement, balance sheet forecast,

analytical and comparative ratio, sensitivity analysis, internal rate of

return, payback period, etc. supported by Annexure 1-19.

9.4.2 The above ratios establish sound financial viability of the project for this

funding pattern and project income from sale of exportable power to third

party / power trader through MSEDCL grid, ethanol and sugar, as

indicated.


61

9.4.3 The financial viability ratios have been tabulated as below and the

financial viability analysis does not include the sale of carbon credits in

the international market.

(Rs. Lakh)

Particulars 1 2 3 4 5 6 7 8 9 10

1. EBIT to Capital Employed 5.33 26.04 27.65 27.14 26.71 26.16 25.49 24.80 23.63 21.57

2. Return on Investment

i) PBT to Capital Employed 0.21 13.25 15.37 15.89 16.48 16.98 17.37 17.69 17.63 16.33

ii) PAT to Capital Employed 0.16 10.48 11.69 11.63 11.67 11.72 11.73 11.74 11.54 10.55

iii) PBT to Net Worth 0.60 37.21 36.03 32.05 29.27 26.93 24.85 23.12 21.57 19.66

iv) PAT to Net Worth 0.48 29.41 27.40 23.45 20.74 18.57 16.78 15.34 14.11 12.70

3. PBT to Sales 0.97 18.62 18.48 19.12 19.99 20.87 21.72 22.56 23.40 23.53

4. Raw Materials Cost to Sales 80.15 68.33 60.95 60.36 60.36 60.36 60.36 60.36 60.36 60.36

5. Operating Ratio 72.74 62.76 66.17 66.73 66.97 67.21 67.45 67.69 67.93 68.18

6. Interest Coverage Ratio 1.81 2.85 3.18 3.52 3.97 4.58 5.40 6.59 8.49 9.44

7. Fixed Assets Turnover Ratio 0.24 1.02 1.28 1.36 1.45 1.54 1.65 1.77 1.92 2.09

8. Debt Equity Ratio 1.69 1.32 0.92 0.65 0.45 0.29 0.16 0.06 0.00 0.00

9. Ratio of N/W + L/T Liabilities

to Fixed Assets 1.05 1.18 1.26 1.34 1.43 1.54 1.68 1.84 2.08 2.50

10.Current Ratio 1.60 1.66 1.84 2.03 2.20 2.38 2.59 2.80 3.12 3.68


62

CHAPTER – 10

CONCLUSIONS & RECOMMENDATIONS

10.1 Project SWOT Analysis

10.1.1 Strengths (S):

- Background and experience of the shareholders, as well as leadership

from the promoters

- Excellent irrigation from mainly canals and lift irrigation on Nira

along with wells, ponds, rivers, and tube wells. The water available

through canal from the government irrigation projects like Nira does

most of the irrigation in this area and availability on a long term basis.

- Favorable policy regime for cogen power, at the Central Govt. and in

Maharashtra, with defined policies regarding sale of ethanol and

exportable power

- Innovation, commitment and vision of the promoters, with backward

and forward integration planned right from beginning

- Professional and business like approach of the promoters, with

meticulous planning for speedy and successful implementation and

operation

- Excellent response to project, at the local farmer level, State

Government., national and international financial institutions, and

equity partners

- Availability of sugar cane trash in the command area to ensure off

season operation of the power plant as envisaged. Availability of

imported coal, at reasonable landed price, ensuring fuel linkage

- Sound financial viability and technical feasibility of the integrated

project at the estimated project capital cost and prevailing selling

prices of sugar, power and fuel ethanol, as well as landed prices of

various raw materials and inputs.

- Deployment of latest technologies and equipment for cogen power,

ethanol and sugar plants


63

- A very high order of socio-economic and environmental value to the

local populace, Maharashtra State and the country, which not only uses

renewable raw material (sugar cane) and fuels (bagasse, cane trash),

without any impact on the socio-ecological balance.

10.1.2 Weaknesses (W):

- Complexities and higher investment levels of the integrated project.

Employment of experienced and professional teams and consultants,

as well as project and equity partners, directors on board will reduce

this weakness.

- Fluctuating prices of procured bagasse and may be biomass / cane

trash and imported coal.

- Changes in the Govt. policies related to sugar & cogen power

- Delay in project implementation may affect the overall momentum and

support

10.1.3 Opportunities (O):

- Excellent opportunity for expansion of individual plants and wheeling

and banking of exportable power to third party consumers, for

maximizing returns

- Potential for trade of carbon credits from the project in the

international market and increased returns

10.1.4 Threats (T):

- Adverse changes in Govt. policies, particularly related to sugar prices

and prices of exportable power


64

10.2 Risks & Mitigates

Risk Particular Mitigates

Performance

risk

Ensured sugar cane

& fuel availability

Cane development has been in full

progress, with experienced senior

professionals and staff appointed for

the purpose. Biomass depots, trash

bailers and entrepreneurship

development / contracts with biomass

traders proposed. A full time fuel

manager and dedicated staff has been

proposed for the cogen power plant

Marketing risk Sugar sale / export

Firm marketing tie up in offing.

Alternative marketing channels

explored. No link with domestic

demand. Value added products

proposed

Regulatory risk

Conversion /

clearances / tariff

order

No difficulty envisaged, as various

governmental agencies have already

expressed their willingness to issue

approvals / consents. All the approvals

in pipeline. Regulatory process being

initiated at MERC will ensure

conducive tariff order for purchase of

power

Financial risk Financial viability

of the project

Satisfactory DSCR. Equity

participation arranged.


65

10.3 Key Management Features

Appointment of Project Team, required experts and consultants, as well as top

level staff - right from the beginning

Appointment of Lender’s Independent Engineer for monitoring the erection

and commissioning activities for timely and smooth implementation of the

project.

Securing all required balance permissions, including IEM licenses / NoC’s /

approvals quickly and achieving the financial closure at the earliest.

Selection of right technology and equipment suppliers for both sugar, cogen

power & distillery plants.

Cane development in the command area

10.4 Conclusions & Recommendations

The captioned integrated sugar, ethanol and cogen power project is technically

feasible and commercially viable and is recommended to financial institutions for

financing term and working capital loans.

The backward and forward linkages of this project / as well as socio-economic

and environment benefits to the local populace makes this a win-win project to all

the stakeholders.

doc no. : pd/dpr/13-14/84 date : 29 october, 2013 date : 9...

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